Europe Markets

European Stocks Sink on US Outlook

European stocks closed sharply lower Thursday, matching declines on Wall Street as Federal Reserve Chairman Ben Bernanke hinted that bank failures are around the corner.

Shares had been lower throughout the session, as investors sifted through mixed earnings from European and American corporations and U.S. economic data added to the gloom.

In corporate news, French insurerAxa and German drug makerBayer fell more than 3 percent after updates that disappointed investors, while mining group Xstrata slid 4.1 percent on newspaper reports that Vale's bid for the group had run into trouble.

Mining shares were the biggest drag on the broader markets, with the Dow Jones STOXX basic resources index slumping 2.3 percent.

Deutsche Telekom shares fell 2.9 percent after reporting quarterly profit about in line with expectations and confirming its outlook for 2008 results. And Spain's Telefonica fell 1.3 percent, saying profit rose thanks to strong mobile growth.

Royal Bank of Scotland, Britain's second-biggest bank which last year led a takeover of ABN Amro, fell 2 percent after posting in-line earnings and raising its dividend.

Brewer InBev rose 9.6 percent to top European winners after its results, and British American Tobacco, looking to acquireScandinavian Tobacco, fell 1.2 percent.

-- Reuters contributed to this report