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Europe closes lower on earnings; Greek crisis worsens

European equities closed lower on Thursday with investor sentiment curbed by a mixed bag of earnings reports and the further deterioration of Greece's economic outlook.

The pan-European Euro Stoxx 600 Index closed the session provisionally lower by around 0.7 percent lower, with the DAX suffering heavy losses. The German bourse finished lower by around 1.8 percent with chemicals, retail, technology and banks being the major underperformers.

Greek crisis worsens

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Greece was at the forefront of investors' minds on Thursday after the country's deteriorating economic situation led ratings agency Standard & Poor's to cut its credit rating to "CCC+" from "B-".

"Without deep economic reform or further relief, we expect Greece's debt and other financial commitments will be unsustainable," S&P said.

Greek bond yields were under pressure on Thursday, with yields soaring on short and medium term paper. The 10-year yield on Greek debt reached as high as 12.8 percent.

Greek stocks actually finished higher on Thursday, with indexes for other struggling nations like Portugal and Italy baring the brunt of the selling.

Unilever beats

Meanwhile, investors were also focused on earnings from major consumer discretionary companies Diageo and Unilever. Unilever reported better than expected sales for the first quarter, recovering from a slowdown as a result of easing growth in China.

Read MoreUnilever first-quarter sales beat expectations

The group saw a rise of underlying sales of 2.8 percent in the quarter, beating analyst expectations of around 2 percent. Shares in the group rallied and closed provisionally higher by 2.4 percent.

Diageo shares finished lower by 3.5 percent after it reported slower quarterly trading. The world's largest spirits-maker said net sales fell 0.7 percent in the three months to the end of March.

Alcatel-Lucent fell to the bottom of the French CAC index after the group, which is being bought by Nokia, was downgraded by a number of brokers including Citigroup, Goldman Sachs and Credit Suisse.

BAE Systems also fell up to 3 percent after its rating was cut by analysts at UBS.

Oil was in focus on Thursday. Brent crude oil slumped to around $62 a barrel following an OPEC report, having jumped to a 2015 high earlier in the session.