European equities recorded their first monthly decline since March, as both oil prices and bond yields climbed higher, further fueling market worries about inflation.

The Stoxx Europe 600 Index closed 0.5% lower, bringing its September loss to 2.5%. The benchmark had briefly risen earlier in the session after data showed U.S. consumer spending grew at its fastest pace in over a year, providing momentum for economic growth amid persistent inflation.

European mining and retail sectors outperformed the broader market on Wednesday, while media stocks posted the steepest declines. The UK's mid-cap FTSE 250 Index gained 0.7% after data revealed the British economy expanded faster than anticipated in the second quarter.

Among individual stocks, insurance services provider Saga surged 23% after reporting first-half pretax profit that far exceeded expectations. Auto shares advanced, with BMW rising 1.5%, as Bernstein analysts attending the company's capital markets day noted that BMW plans to restore profit margins by streamlining operations, cutting costs, and selling more high-priced models.

European stocks have stalled since hitting a record high in mid-August, with inflation concerns intensifying the selloff in bond markets. France's CAC 40 Index lagged on Wednesday after data showed French inflation came in higher than expected.

Ulrich Urbahn, head of multi-asset strategy and research at Berenberg, said the Stoxx 600's September decline "looks more like a test of this rally rather than a decisive change in trend."