European stocks close lower amid inflation concerns, elevated bond yields

European stock markets closed lower on Wednesday as investors monitored the impact of Middle East developments on oil prices and inflation, alongside elevated bond yields and expectations for central bank policy.

The benchmark Stoxx Europe 600 index fell 0.5% to 634.89 points.

The UK's FTSE 100 declined 0.29% to 10,606, while Germany's DAX 40 lost 0.79% to 25,199.19.

France's CAC 40 dropped 0.89% to 7,964.51, and Italy's FTSE MIB shed 0.84% to 51,371.98.

Spain's IBEX 35 fell 0.47% to 19,426.2, ending September with a monthly loss of around 2.7%.

Investors continued to assess how higher energy costs could affect inflation and the outlook for interest rates across Europe.

Germany's annual inflation accelerated to 3.3% in September, exceeding expectations and reaching its highest level since December 2023, as escalating conflict in the Middle East pushed up energy costs.

Meanwhile, the UK's economic growth for the second quarter was revised upward to 0.5%.