PARIS: A fall in the shares of the euro zone’s largest bank BNP Paribas weighed on Europe’s STOXX 600 on Wednesday, while China-exposed miners and luxury firms limited losses after strong data from the world’s second largest economy soothed fears of an economic slowdown.

The continent-wide STOXX 600 fell 0.7% by the close, after rising as much as 0.4% in early trading.

BNP Paribas slid 4.2% after the Belgian state participation agency SFPI said the country was preparing the sale of a third of its 7.8% equity stake in the bank.

The banking index dipped 1.6%, slipping from multi-year highs hit in the previous session.

European shares have had a robust start to the year as relaxation of China’s zero-COVID protocols breathed life into hopes of demand recovery. The STOXX 600 notched its fourth positive month in five in February, supported by sharp gains in rate-sensitive banking shares.

However, risky assets fell out of favour as fears of further monetary tightening by the European Central Bank to tackle sticky inflation weighed on the minds of investors.

Data on Wednesday showed regional inflation from Germany ticked up last month, with all eyes now on preliminary euro area wide consumer price inflation reading for February due on Thursday.

Also weighing on the benchmark European index, utilities declined 2.6%, with Spain’s Iberdola and London’s National Grid losing 2.3% and 3.0%, respectively.

Capping losses on the STOXX 600, China’s factory sector grew in February at the fastest pace in more than a decade, an outlier in Asia, where manufacturing growth stalled elsewhere.

Luxury giants such as LVMH and Kering which have big exposure to China, rose 0.4% and 1.2%, respectively.

Italian luxury group Moncler climbed 3.3% after its sales jumped 25% at constant exchange rates to come in ahead of forecasts.

“The reopening of China post-COVID would have a positive effect on global growth. In general, you would say that for a lot of luxury names recovering Asian demand is an important driver,” said Richard Flax, chief investment officer at Moneyfarm.