European equities closed lower on Thursday after both the European Central Bank (ECB) and Bank of England kept their interest rates at record lows.
European markets
ECB in focus
The pan-European provisionally closed down 0.5 percent at 1,314.52 points after eking out mild gains in the previous two sessions.
Stocks picked up speed with upbeat data from the euro zone, but comments from ECB President Mario Draghi dampened spirits. The French closed provisionally down 0.9 percent, while the German and the U.K. closed down unofficially 0.8 and 0.5 percent respectively.
(Read more: ECB and Bank of England rate decisions)
The ECB left its benchmark interest rate unchanged at 0.25 percent on Thursday, with investors focusing on President Mario Draghi's press conference shortly after the announcement.
Draghi said it was too early to declare victory in the euro zone area, despite the signs of recovery.
"Unemployment stands at 12-and-more percent. The only positive news about unemployment is that we see this high — unacceptably high — unemployment rate, stabilizing," he said.
"The recovery is there but it's weak, it's modest and, as I've said many times, it's fragile. Meaning that there are several risks from financial to economic to geopolitical to political risks that could undermine easily this recovery."
While some expected Draghi to hint at future stimulus given lower-than-expected December inflation data, Draghi insisted he did not expect deflation.
On the data front, economic sentiment for the 18 countries that share the single currency rose more than expected in December, according to the European Commission.
Meanwhile, the Bank of England left interest rates at a record low of 0.5 percent and its asset purchase target unchanged at £375 billion ($617 billion) as expected on Thursday.
(Read More: Bank of England holds interest rate at 0.5%)
Also, Portugal launched a five-year bond, its first auction of new debt in eight months, as it seeks to demonstrates its ability to finance itself in the public markets and eventually exit its bailout program. The Portuguese benchmark index closed higher by 0.3 percent.
(Read More: US's Lew flies to Portugal as periphery parties)
U.S. stocks turned lower on Thursday, as investors considered whether the Federal Reserve might accelerate tapering, given the drop in jobless claims and expectations that Friday's payrolls report will be a positive one.
Improvements in the labor market have been cited as central to Fed policy decisions. Thursday's data showed applications for unemployment benefits fell to 330,000 last week, below estimates of 340,000.
Supermarkets release earnings
U.K. baker announced a return to to sales growth in its fourth quarter with a strong trading performance in the Christmas period; shares rose by 4.8 percent.
Clothes and food chain reported Thursday that group sales rose 1.8 percent in the third quarter. Shares closed around 3.6 percent higher.
Supermarket reported that like-for-like sales in Europe fell 1.6 percent in the six weeks to January 4; shares closed down roughly 1.2 percent.
Meanwhile, said it had a "disappointing" Christmas trading period and shares finished the day provisionally down 7.75 percent.
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