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Europe shares close lower; BoE holds interest rate at 0.5%

European shares closed lower on Thursday, having fluctuated for much of the day, as investors grew nervous ahead of the upcoming first quarter earnings season.

The pan-European FTSEurofirst 300 Index closed provisionally lower by 0.6 percent at 1,329.97 points, tracking Wall Street's decline after a two-day rally gave up steam.

"Investors are looking to earnings perhaps with slight trepidation," said Jack Ablin, chief investment officer at BMO Private Bank. "Analysts aren't expecting much and neither are investors."

In the U.K., the Bank of England announced it was holding interest rates at a record low of 0.5 percent, with asset purchases unchanged at a total of £375 billion ($629 billion). This was as expected, and came after the International Monetary Fund (IMF) upped its forecast for U.K. growth on Tuesday.

The U.K. FTSE 100 closed flat, bucking the continent's trend downwards.

Europe was lead lower by the Spanish and Italian indexes, which both fell 1.3 percent. While shares on the Ibex and FTSE MIB have risen more than 25 percent since last June, market volatility and investor concern over upcoming earnings forced the shares lower on Thursday.

Italy saw weaker-than-predicted industrial output data, while Bankia's selling of its stake in Iberdrola saw Spanish utilities stock drop.

Meanwhile, investors and analysts closely watched Greece's first bond sale in four years. Greece auctioned 3 billion euros of five-year bonds at a yield of 4.95 percent. The issuance attracted around 20 billion euros of demand.

Read MoreGreece offers first long-term bond since 2010

M&S shares fall

In stocks news, Marks and Spencer saw its shares close 3.2 percent lower after a fourth-quarter trading update. The U.K. retailer signaled a rise in clothing sales, which it said were the best in the last three years.

Roche shares closed flat, despite news that France's competition authority was investigating the drugmaker over allegations it have been involved in anti-competitive practices. Roche was also hit with a report that its drug Tamiflu was ineffective.

Read MoreFlu drug stockpiles a waste of money: Report

However, shares of LVMH surged 3.3 percent after the luxury fashion group released forecast-beating first-quarter results.

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