The pan-European STOXX 600 benchmark index was down 0.5 percent by 0726 GMT. Germany's DAX also declined 0.5 percent and the UK's FTSE fell 0.6 percent.

Defensive companies including consumer and healthcare stocks were the main drag on the STOXX. Shares in British American Tobacco, Nestle and Novartis were down between 0.6 and 3.7 percent.

Their losses were partly offset by gains among banks , which tend to benefit from rising rates and bond yields. German lenders Commerzbank and Deutsche Bank  were up 1.9 and 1.5 percent respectively, as German 10-year bond yields hit a 4-1/2 month high.

Some Italian banks, however, remained under pressure as investors monitored developments in Rome, where the government is trying to finalised budget details after clashing with the EU over its deficit targets.

Danske Bank fell 2.3 percent after it discontinued its share buyback programme and said it was in talks with U.S. authorities about non-resident accounts at its Estonian branch, which are at the centre of a $235 billion money laundering scandal.