European shares accelerated losses to close lower as investors digested events in Ukraine and considered the likelihood of more monetary easing from the European Central Bank (ECB).
Ukraine tensions flare
The pan-European FTSEurofirst 300 closed unofficially lower by 0.7 percent at 1,369.2 points, with the DAX leading the losses. The German benchmark index—whose component companies are viewed as particularly reliant on Russian gas—closed provisionally 1.2 percent lower.
European markets
Kiev officials accused Russia of launching a fresh military incursion across its eastern border, Reuters reported Thursday. Ukraine's Security and Defense Council claimed the town of Novoazovsk has fallen to the Russian military.
The events throw a spanner in the works at this week's peace meetings in Belarus, where the leaders of the two nations agreed to de-escalate tensions.
Russian stocks on the MICEX index ended down around 1.7 percent on Thursday. The Russian ruble declined 1.6 percent against the dollar to 36.74.
The U.K. FTSE 100 closed unofficially 0.4 percent lower; the CAC 40 ended 0.7 lower.
ECB action?
In early afternoon, official data revealed that German inflation was unchanged in August. This came a day ahead of Europe-wide inflation figures which will be closely watched, as the metric is a key gauge for the ECB in deciding policy.
Expectations are running relatively high that the central bank will act at its September 4 meeting, after President Mario Draghi sounded a dovish note at his Jackson Hole speech last Friday.
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In Spain, a final reading of second-quarter gross domestic product (GDP) came in as expected, showing a rise of 0.6 percent from the previous quarter. The year-on-year figure came in at 1.2 percent. Consumer price data for Spain showed a yearly fall of 0.5 percent for August. This was better than forecasts but lower than the figure for July.
In the U.K., a business body forecast the country's economy would post its fastest growth this year since 2007. The British Chambers of Commerce upgraded its 2014 forecast for 2014 to 3.2 percent, but said that growth would slow by 2016.
Read MoreUK economy to grow at fastest rate since 2007
Deal activity for telecoms
In stocks news, the telecoms sector was one of the standout gainers. Telecom Italia announced it had offered to buy Vivendi's Brazilian unit in a deal that valued the company at 7 billion euros ($9.25 billion).
Telecom Italia shares closed around 1.3 percent higher. Vivendi shares ended up around 0.2 percent.
Read MoreTelecom Italia bids 7B euros for Vivendi's GVT
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