Euro Stocks End Lower on Economy Fears

European stocks closed lower across the board Thursday, following two days of gains, as fears over the health of the global economy remained. Evidence of a slowdown in the euro zone economy and expectations of further writedowns from the banking sector added to the negative sentiment.

The FTSEurofirst 300 index of top European shares closed unofficially 0.5 percent lower at 1,310.84 points, having gained more than 4 percent over the past two sessions on hopes that the worst of the asset writedowns in the banking sector may be over.

The DJ Stoxx European banks index fell 2 percent as UBS and Britain's Lloyds TSB fell 4.7 percent each.

"Fears returned to the volatile banking sector," Barclays Wealth said in a note.

Better-than-forecast U.S. services data helped lift European stocks from session lows mid-afternoon, after an earlier drop caused by soaring numbers of American's seeking unemployment benefit last week.

Mining stocks were strong Thursday, with Antofagasta rising 2.1 percent and Anglo American gaining 2.9 percent.

In corporate news, Italy's government vowed to keep Alitalia flying after the collapse of its sale to Air France-KLM. Alitalia Chairman Maurizio Prato resigned, insisting the airline is "cursed."

Swiss agrochemicals company Syngenta said it expects strong growth across all regions after reporting a 20-percent rise in first-quarter sales. Shares were 5.9 percent higher.

And in the UK, Mothercare, Halfords and Moss Bross all reported comparable sales growth either in-line or above analysts' expectations, adding some optimism to the retail sector.

In economic news, euro zone retail sales turned out much weaker than expected in February, contracting on the back of falls in Germany and Spain and reinforcing concerns about the outlook for economic growth.

And a survey by the Bank of England showed that the credit squeeze for households and businesses looks set to intensify over the coming months as lenders grow increasingly nervous over the economic outlook.

-- Reuters contributed to this report

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