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By Bloomberg

European stocks were little changed after a three-day rally amid mixed reports on the region’s output.

The Stoxx 600 declined less than 0.1 percent to 406.28 at 10:03 a.m. in London, paring a drop of 0.4 percent. A composite index showed manufacturing and services in the euro area expanded less than forecast in May. Germany’s output missed projections, while France’s beat estimates.

“The fundamentals are certainly a bit more sluggish than what they were at the beginning of the year,” said Ralf Zimmermann, an equity strategist at Bankhaus Lampe KG in Dusseldorf, Germany. “It’s a wake up call showing us that we are still at sub-par growth. For stocks this is a cap to the upside. The market is likely to trade in a broad sideways range with more downside risks.”

The Stoxx 600 rallied 2.5 percent in the past three days to its highest level since April as the European Central Bank said it plans to boost bond purchases in May and June. The ECB publishes an official account of its latest policy meeting at 1:30 p.m. Frankfurt time.

Investors are also watching developments in Greece, with the country’s prime minister due to engage with European leaders at a meeting in Riga, Latvia on Thursday. The ECB yesterday approved the smallest increase in emergency cash for the country’s lenders since tensions re-emerged in February, a sign that deposit outflows may be easing as political talks on the nation’s finances improve.

Banks Drop

Lenders contributed the most to losses on the Stoxx 600. Raiffeisen Bank International AG slid 2 percent after saying first-quarter profit nearly halved. Banca Monte dei Paschi di Siena SpA declined 3.5 percent after saying investors can exercise rights to buy new shares for about three weeks starting May 25.

Transocean Ltd. advanced 1.7 percent after the owner of the rig that sank in the 2010 Gulf of Mexico oil spill settled its remaining issues with BP Plc. The two companies said they agreed to release all claims against each other, with BP paying Transocean $125 million to compensate for legal fees.

Tesco Plc gained 1 percent after a report said the U.K. grocer will begin a process to sell its South Korean unit in July.

Rio Tinto Group and BHP Billiton Ltd. pushed commodity producers higher after worse-than-forecast preliminary May data on China’s factory output fueled speculation the government will boost stimulus.

Minutes from the Federal Reserve’s last meeting showed Wednesday that officials didn’t expect to raise interest rates in June. Reports today may show jobless claims increased last week, while economists forecast existing home sales rose 0.8 percent in April from a month earlier.