• European stocks closed lower on Wednesday, extending losses earlier in the week.
• Investors reacted to the latest inflation data from the United States.

LONDON — European stocks closed lower Wednesday as investors reacted to the latest inflation data from the United States.

The pan-European Stoxx 600 index provisionally closed down 0.9% with almost all sectors in negative territory following hotter-than-expected U.S. inflation data. The consumer price index, a broad measure of everyday goods and services, soared 9.1% in June from a year ago, and above the 8.8% Dow Jones estimate.

That marked another month of the fastest pace for inflation going back to December 1981. Excluding volatile food and energy prices, the so-called core CPI increased by 5.9%, compared to the 5.7% estimate.

The reading could prompt the Federal Reserve to hike interest rates by another 75 basis points during this month's meeting. Last month, the Fed raised its benchmark interest rates three-quarters of a percentage point to a range of 1.5%-1.75% in its most aggressive hike since 1994.

On Wall Street, stocks traded lower as investors reacted to the inflation numbers.

Among the best performers on the Stoxx 600 index was Orion, its stock up 9% after the Finnish drugmaker raised its full-year outlook after signing a collaboration agreement with Merck aimed at developing a drug for prostate cancer.

Meanwhile, Sinch closed 0.8% lower, paring sharp losses earlier in the session. It's been a tough week for the Swedish cloud communications company, with the stock declining on Tuesday after it said its second-quarter profit would be hit after it reassessed the historical cost of goods sold.

Other data out earlier on Wednesday showed the U.K.'s economy expanded unexpectedly in May with output growing by 0.5%, according to the Office for National Statistics. A Reuters poll of economists had anticipated zero growth in May from April.

— CNBC's Jeff Cox and Yun Li contributed to this market report.