LONDON — European stocks dipped slightly lower Wednesday following a choppy session as a China-fuelled rally lost steam.

The pan-European Stoxx 600 was down 0.2% at 3:00 p.m. London time, with sectors and major bourses pointing in opposite directions.

Europe's banking index traded 0.65% higher as market participants closely monitored UniCredit's swoop for Commerzbank, Germany's second-largest lender.

Milan-based UniCredit announced on Monday that it had increased its stake in Commerzbank to around 21% and submitted a request to boost that holding to up to 29.9%. It follows UniCredit's move to take a 9% stake in Commerzbank earlier this month.

Shares of Commerzbank, which announced Wednesday that Bettina Orlopp will take over as chief executive officer in the near future, rose 0.9%.

Looking at individual stock moves, Finnish engineering company Valmet surged to the top of the European benchmark. It comes after the firm received an order valued at roughly 1 billion euros ($1.1 billion) from a pulp mill in Brazil. Shares of Valmet rose more than 10% on the news.

German software developer SAP tumbled toward the bottom of the Stoxx 600 after Bloomberg reported Tuesday that, among others, the company is under investigation in the U.S. over price-fixing allegations. Shares were last seen down 2.4%.

Elsewhere, Sweden's Riksbank on Wednesday cut interest rates by 25 basis points to 3.25% and suggested the policy rate could be reduced further at the two remaining monetary policy meetings this year.

Sweden's central bank said a rate cut of 50 basis points is possible at one of these meetings. One basis point equals 0.01%.

European stocks closed 0.6% higher on Tuesday, buoyed by China's central bank monetary stimulus measures with mining, technology and household goods the best-performing sectors.

The People's Bank of China said the central bank would cut the reserve requirement ratio for banks by 50 basis points, although it did not provide a specific timeline.

UK economic outlook

The Paris-based Organization for Economic Cooperation and Development (OECD) on Wednesday sharply upgraded Britain's economic growth prospects.

The OECD said it expects the U.K. economy to expand by 1.1% this year and 1.2% next year. That's up from previous forecasts of 0.4% growth in 2024 and 1% in 2025. The revisions come after the OECD said in May that the U.K. was likely on course to become the worst-performing economy of all advanced nations next year.

Britain's FTSE 100 index traded 0.3% higher on the news, reversing earlier losses.

Asia-Pacific markets were largely range-bound overnight, although Hong Kong's Hang Seng index extended its rally and climbed 2.2% on the back of the announced stimulus, while mainland China's CSI 300 recorded its largest one-day gain in over four years.

U.S. stocks were little changed in early deals Wednesday. The major three averages are on track for a positive month, though concerns that the U.S. economy could be slowing down remain after last week's interest rate cut from the Federal Reserve.