European shares slipped on Wednesday, as investors awaited U.S. inflation data which is expected to hit 40-year highs, cementing the case for a large interest rate hike by the Federal Reserve, and possibly pushing the euro to parity with the dollar.

The pan-European STOXX 600 index fell 0.5% by 0713 GMT, after ending higher in a volatile session on Tuesday.

Banks, healthcare and consumer stocks were among the biggest drags on the index.

The euro has tumbled recently as investors fear aggressive monetary policy tightening could cause a recession. Markets speculate that U.S. inflation data for June, due at 1230 GMT, could be the catalyst that prompts another rally in the dollar, bringing it at par with the single currency.

Analysts worry that this could worsen euro zone inflation, already at record highs.

Finnish drug maker Orion topped the STOXX 600, up 4.3% on raising its full-year outlook after it signed a collaboration agreement with Merck for developing a prostate cancer drug candidate.

(Reporting by Susan Mathew in Bengaluru; Editing by Rashmi Aich)