FRANKFURT: HSBC and Nokia dragged European shares lower on Wednesday as a surge in coronavirus cases appeared to threaten a recovery in the global economy, while Britain's plan to head off an unemployment crisis cushioned a fall in London's domestically focused stocks.

The pan-European STOXX 600 fell 0.7% with banks, travel & leisure and auto stocks dragging. Limiting losses were gains in basic material stocks and utilities.

The UK mid-caps index cut some session losses before closing 1% down, after finance minister Rishi Sunak promised an additional 30 billion pounds ($38 billion) in stimulus. This included bonuses to get furloughed staff back to work and a cut in value added tax for the hospitality sector.

London's blue-chip index was weighed down by HSBC tumbling 3% after Bloomberg reported that US President Donald Trump's top advisers had considered measures to undermine the Hong Kong currency's peg to the US dollar. The proposal could potentially limit the ability of Hong Kong banks to buy dollars.

On the STOXX 600, Nokia was the worst performer, slumping 8.1% on concerns that it was losing the business of its key client Verizon in the United States. JPMorgan downgraded it to "neutral".

The STOXX 600 had climbed to a near one-month high earlier this week as improving economic data and bets of a swift rebound in China drove gains, but investors remained cautious about the progress of a European Union recovery fund and the upcoming earnings season.

Analysts expect companies listed on the STOXX 600 to report a 53.9% decline in profit in the second quarter, according to Refinitiv data.

Denmark's Orsted jumped 4.8% after signing the world's largest corporate renewable power deal with Taiwan Semiconductor Manufacturing Co.

The UK online fashion retailer Boohoo slumped for the sixth day running, hit by news that Next Plc, Zalando SE and Amazon.com Inc were delisting its products.