European stock markets were once again caught-out by a surprise series of headlines that quickly helped erase modest gains from earlier in the session. Major markets around the region are trending lower for the session after an influential reading of investor confidence in Germany showed the steepest decline in sentiment since 1998. The gloomy view was compounded by a €3bn sale of short-term Spanish debt that cost the Treasury more than 5 percent in interest and only secured funding for 12 and 18 months. The costs, which are more than 2 percent higher than in a similar sale last month, indicate the level of concern investors have over the state of the nation's banking system. The sale was further complicated by conflicting reports that Spain may delay publication of a government-ordered audit of its banks that may show the need for as much as €100bn in new capital.

Here in the UK, inflation figures for the month of May showed the first dip in consumer prices for nearly three years amid the first double-dip recession since the 1970s. The May CPI report could also have opened the door for another round of asset purchases by the Bank of England.