European equities drifted lower as investors balanced strong corporate earnings with signals that inflation was weighing on companies’ profitability as the US central bank prepared to issue its latest monetary policy decision.

The regional Stoxx Europe 600 index fell 0.3 per cent as a warning on cost pressures by multinational consumer goods group Reckitt Benckiser took some gloss off an earnings season where investors expect stellar profit growth following last year’s historic recession.

Shares in Reckitt, the maker of household staples including Dettol hygiene products and Enfamil infant formula fell almost 9 per cent after it said rising prices of commodities and other raw materials would “take time to offset” with price rises and productivity measures.