European shares retreated from near one-year highs on Wednesday as concerns about a possible rise in inflation tempered optimism around a vaccine-led global economic recovery, while Kering tumbled after sales at its Gucci brand fell more than expected.

The pan-European STOXX 600 index was down 0.4% by 0822 GMT, while London's mid-cap FTSE 250 lost 0.2% as data showed British inflation rose a little more than expected in January.The export-laden FTSE 100 slipped 0.4%.

"Combined with sharp rises in energy and commodity prices, there is growing concern that higher prices will not only choke off any post-pandemic recovery, but they could also crimp future consumer spending due to higher living costs," said Michael Hewson, a market analyst at CMC Markets UK.

The benchmark STOXX 600 has rebounded more than 50% since a coronavirus-driven crash in March as a raft of monetary and fiscal stimulus fuelled a recovery in global financial markets, but has lagged its US counterpart due to fears of the business impact from prolonged lockdowns.

While central banks, including the Bank of England and the US Federal Reserve, have signalled their intention to keep monetary policy loose over the next few months, market participants have started to factor in a rise in inflation as economic data improves.

European banks rose 0.3% on Wednesday as the so-called "reflation trade" pushed up bond yields.

Investor attention this week will remain on consumer confidence, retail sales and business activity data from across the euro zone, while January inflation figures for the bloc are due next week.

In company news, shares of French conglomerate Kering sank 8.2% to a three-and-a-half-month low as it said revenue for the whole group fell 8.2% in the fourth quarter. The broader European retail index lost 3.1%.

Lucky Strike maker British American Tobacco shed 5.8% even as it reported a stronger-than-expected annual profit, while Nivea maker Beiersdorf tumbled 6.6% after it said it did not expect a recovery in profitability in 2021 even though sales should rise.

Overall, analysts expect earnings at STOXX 600 firms to have fallen 19.9% in the fourth quarter, steeper than the 18.2% estimate issued last week, according to Refinitiv data. Still, earnings are expected to rebound nearly 43% in the first quarter.

In a sign that European M&A activity was picking up, shares of Swedish cloud computing services provider Sinch AB surged 13.9% after it agreed to buy US-based communications company Inteliquent for $1.14 billion.