By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets retreated following two positive trading days on Thursday, after higher-than-expected Chinese inflation data stoked fears the Chinese government will withhold more easing measures.

The Stoxx Europe 600 index slipped 0.1% to 303.37, after closing at the highest level since June 2008 on Wednesday.

Among biggest decliners, shares of Banco Espirito Santo SA sank 4.4%, after J.P. Morgan Cazenove cut the Portuguese bank to underweight from neutral.

Shares of miner Eurasian Natural Resources Corp. dropped 1.5%, after the firm reported mixed first-quarter output results with iron ore, ferroalloy and aluminum down on the year, while copper output improved in the period.

Bucking the negative trend, shares of Experian PLC jumped 5.9%. The credit-report firm said it would continue to buy its own shares, while also raising full-year dividends 9%. The company, however, posted a 36% drop in pretax profit for the full year.

For the broader European stock markets, investors looked east where most Asian bourses fell after data showed consumer prices rose more than expected in China. The April CPI rose 2.4% from a year earlier, topping analysts forecasts and increasing more than the 2.1% reported in March.

Some analysts feared that the rising inflation may discourage the Chinese government to ease the economy further, which would mean less liquidity injected into the economy.

"Should this happen then the consequences will likely be played out on a global basis, but given the overshoot was so limited, the caution may be somewhat exaggerated by the fact markets are simply looking a bit toppy at these levels," said Fawad Razaqzada, market strategist at GFT Markets, in a note.

In the U.S., stock-index futures pointed to a lower open on Wall Street, after the Dow Jones Industrial Average (DJI) and S&P 500 index (SPX) both closed at all-time peaks on Wednesday.

Monetary policy was also on the agenda in the U.K., ahead of the Bank of England's latest policy decision due at noon London time, or 7 a.m. Eastern. Most analysts expect the central bank to keep interest rates at a record low 0.5% and make no changes to its asset-purchase program.

The U.K.'s FTSE 100 index was slightly lower at 6,580.72.

Shares of Standard Chartered PLC shaved off 2.4%, after J.P. Morgan Cazenove cut the bank to neutral from overweight a day after the company reported a drop in first-quarter profit.

France's CAC 40 index posted one of the biggest drops among country-specific indexes, down 1% at 3,916.64.

Heavyweight drug maker Sanofi SA (SNY) shaved off 1.3%, as the stock went ex-dividend, meaning new investors will miss out on the latest dividends.

In Germany, the DAX 30 index was 0.1% lower at 8,242.35, wavering around the all-time closing high reached on Wednesday.

Shares of Kloeckner & Co. SE added 2.4% in Frankfurt, after Citigroup lifted the steel trader to neutral from sell.

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