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European shares close lower after ECB decision; Russia weighs

European stocks closed lower on Thursday, after fluctuating for much of the day, as investors reacted to rate decisions by the Bank of England (BoE) and European Central Bank (ECB).

Draghi speaks

The pan-European FTSEurofirst 300 Index closed provisionally lower by 0.7 percent at 1,314.09 points with Portugal's PSI 20 Index leading shares down. The state bailout of lender Banco Espirito Santo continues to plague the country's stock market with traders wary about the health of rival banks. The bourse has now entered an official bear market and companies like Banif Sa Financial Group and Portugal Telecom were among the biggest fallers on Thursday.

The banking sector was one of the major laggards on Thursday, with cyclical stocks from the mining sector, autos and construction also weighing down European benchmarks.

It came as the ECB kept interest rates unchanged. In a press conference following the decision, ECB President Mario Draghi said the central bank had "intensified" preparation for an asset-purchase program, and was willing to launch one if the inflation picture changed.

Read MoreLive blog: ECB holds fire despite recovery concerns

Meanwhile, in the U.K., the Bank of England (BoE) left interest rates and its asset purchase target unchanged, as an improving economy continued to add to speculation that a rate hike could be around the corner.

Read MoreBoE holds fire amid rate hike expectations

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German data disappoints, Russia weighs

Macroeconomic concerns of central bank policy from the U.S. and further tensions in Russia and Ukraine weighed on sentiment in Europe.

Moscow announced on Thursday that it was hitting back at Western sanctions by banning certain agricultural and food imports. The ban includes fruit, vegetables, meat, fish, milk and dairy imports from the United States, the European Union, Australia, Canada and Norway.

Read MoreRussia bans Western food imports for a year

In the U.S., stocks gained in on Thursday amid corporate earnings and positive data on the labor market.

Read MoreStocks rise on earnings, upbeat jobs data

On the data front, Germany posted more disappointing industrial data on Thursday. Output (excluding construction) rose only 0.2 percent month-on-month in June, after last month's hefty fall.

Following the data, Daiwa Europe said German GDP growth in the second-quarter now looked "certain to disappoint". It forecast the economy grew by only 0.2 percent quarter-on-quarter between April and June. Data also showed Spanish industrial production gaining in June, continuing its encouraging run.

Read MoreGerman correction: DAX falls 10% from June

Nestle strong despite 'volatile' backdrop

Nestle reported 4.7 percent organic first-half growth in a "volatile trading environment" on Thursday. The Swiss food giant, whose brands include KitKat chocolate bars and Nescafe coffee, also announced a 8 billion Swiss franc ($8.8 billion) share buyback program. It finished near the top of the pan-European STOXX 600, up around 3.4 percent.

Rio Tinto and Commerzbank were also strong performers following better-than-expected results.

Read MoreRio Tinto profit jumps 21%, beats forecasts

FTSE 100-listed Rio Tinto posted a more-than-doubling in half-year profit, benefiting from cost-cutting and rising output. Analysts had forecast that the slump in iron ore prices would weigh on earnings. Rival Randgold Resources posted a decline in second-quarter profit quarter-on-quarter, due to lower earnings from joint ventures.

Commerzbank posted a net profit increase to 300 million euros in the first half of 2014, due to a falloff in bad loans. This followed a loss of 58 million euros in the same period a year before. Commerzbank shares shot to the top of the STOXX 600 when markets opened, before paring gains to finish around 0.5 percent higher.

Commerzbank speeds up clean-up, net profit doubles

Also in Germany, Deutsche Telekom reported a bigger-than-expected quarterly core profit, boosted by earnings in the U.S. Shares finished around 1.5 percent lower on Thursday, having taken a hit in the previous session, after Sprint backed away from its offer for Deutsche Telekom carrier T-Mobile U.S. Dish Network Corporation could now make a bid.

There were also second-quarter earnings from Adidas in Germany, which has complained about the impact of Russian sanctions on business. Nonetheless, it reported 14 percent net revenue growth in emerging Europe in the second-quarter on a currency-neutral basis, driven by growth in sales to the Russia and the Commonwealth of Independent States. Despite this, shares slumped around 4 percent on Thursday.

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