European stocks finished down nearly 2.4% on Thursday.
They extended losses following the remarks by European Central Bank President Jean-Claude Trichet on the outlook for the euro zone and as he said the bank’s policy makers remain focused on inflation.
Banks were particularly affected, Barclays slumped 6% and Banco Santander 4%.
Also down carmaker BMW, engineering giant Siemens and steelmaker ThyssenKrupp on word that German factory orders unexpectedly fell in July.
Investor sentiment was also hit by an surprise jump in the weekly US unemployment benefit claims and lacklustre August sales figures from a number of US retailers.