(Bloomberg) -- European stocks dropped as investors turned their focus to this week’s earnings from artificial intelligence-bellwether Nvidia Corp. while monitoring for fresh clues on the outlook for interest rates.

The Stoxx 600 Index fell 0.2% by the close, after hitting an all-time peak last week. Travel and leisure and consumer products stocks declined the most, while miners and health care outperformed.

GSK Plc eased as the UK drugmaker faced a whistleblower lawsuit that could potentially cost it billions of dollars from the laboratory that revealed the presence of a probable carcinogen in heartburn medication Zantac. 

European stocks had resumed a rally this month on the back of a better-than-expected earnings season and expectations that the European Central Bank could cut rates before the US Federal Reserve. Sentiment was dampened late on Tuesday after Fed Governor Christopher Waller said he needs to see several more good inflation numbers to begin interest-rate cuts.

“The big test this week will be clearing the massive hurdle that is Nvidia expectations,” said James Athey, a portfolio manager at Marlborough Investment Management Ltd. “I anticipate stocks will likely churn in a holding pattern until then.”

Nvidia is due to report quarterly earnings late on Wednesday, with investors looking for signs that the momentum around AI is sustainable.

Elsewhere, inflation-related releases across the Group of Seven will prime central bankers for crucial June interest-rate decisions as they meet in Italy to discuss the state of the world economy.

Meanwhile, UK equities are back in demand, partly due to cheaper valuations and as inflation is seen falling back to a nearly three-year low.

For more on equity markets:

  • For The UK Equity Market, ‘The Time Is Now’: Taking Stock
  • M&A Watch Europe: International Paper, Suzano, XP Power, Reckitt
  • London Is Still Europe’s Share Sale Capital: ECM Watch
  • US Stock Futures Unchanged; Larimar Therapeutics Inc Gains
  • Come fly away: The London Rush

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--With assistance from Michael Msika.

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