European markets gave up early gains and pushed lower Wednesday as sentiment turned sour after the Standard & Poor's Ratings Services downgraded Italy's credit rating.
S&P lowered Italy's sovereign credit rating from "BBB+" to "BBB" on Tuesday, saying the country's economic prospects were getting weaker. The new rating is just two notches above the "junk" status but remains investment grade. The ratings agency offered a negative outlook for Italy and said it could make another downgrade in 2013 or 2014.
Meanwhile, economic data released in France showed industrial production in the country in May dropped as production of manufactured goods declined. Separate reports showed France's current account deficit grew in May to 4.1 billion euros from 2.8 billion euros in April.
In Germany, official statistics revealed German inflation in June increased for the second consecutive month, hitting its highest level since December 2012 as prices of food and energy increased.
Stocks on the Move
In earnings related news, French catering and vouchers company Sodexo SA rose 1.3% after reporting higher revenue for the first nine months of the year.
U.K. -based luxury retailer Burberry soared 4.5% after the company's retail sales in the first quarter topped analysts estimates.
Bike retailer Halfords Group Plc. bounced over 8% after reporting strong first quarter sales figures.
Among financials, banks were trading mixed. BNP Paribas SA eased 0.5% while Societe Generale SA was little changed.
Llyods Banking Group Plc. lost 0.7% in London while Barclays Plc. stuck to the flatline.
Resources stocks, on the other hand, pushed deeper into the negative zone.
Top miners BHP Billiton Plc. and Rio Tinto Plc. erased 0.5% and 1.1% respectively while Anglo American Plc. pulled back around 1%.
Glencore Xstrata Plc. fell 1.7% after the miner said it intends to sell its Dakota Growers Pasta Co. business as part of its divestments plans.