European stock markets ended firmly lower Thursday after ECB President Jean Claude-Trichet maintained his hawkish tone and kept interest rates pat, while data from the U.S. added to the gloomy outlook. The Bank of England also kept rates steady, as widely expected.
Financial stocks closed lower by over 2 percent on nerves after Euronext-listed Carlyle Capital, a unit of private equity giant Carlyle, defaulted after failing to meet margin calls on sums of more than $60 million.
Meanwhile, shares in UBS ended 4.7 percent lower due to speculation it had sold a huge portfolio of risky mortgages at a deep discount and that the scale of its subprime losses was rapidly mounting.
There was a muted response to news that troubled U.S. bond insurer Ambac will raise $1.5 billion by an offering of common stock and sale of equity units.
Meanwhile, spreads between Italian and German government debt widened to their highest level since the creation of the euro, prompting action from the Italian Treasury.
In earnings news, Dutch retailer Ahold announced its first dividend in 5 years after it reported a 9 percent rise in fourth-quarter net profit, beating analysts' expectations.
Also in the Netherlands, chemicals company Akzo Nobel reported a 43 percent rise in fourth-quarter operating profit, helped by cost savings, but warned of a challenging 2008.
Deutsche Post's fourth-quarter operating profit beat forecasts as its new management team look to put the firing of their former boss behind them. The logistics company said it was close to finding a solution for its struggling U.S. division.
And French retailer Carrefour plans to hand back $6.8 billion to shareholders as it sells off property assets as it reported slightly higher 2007 profit and predicted faster profit growth in 2008.
-- Reuters contributed to this report