European shares closed lower Thursday as investors paused for breath and awaited key jobs data due out in the U.S. on Friday.
The pan-European STOXX 600 closed provisionally lower by 0.97 percent, with all major European bourses finishing in the red. This comes after a stellar rally on Wednesday following dovish comments by Federal Reserve Chair Janet Yellen. For the quarter, the index was down 7.6 percent.
Banking and telecoms stocks led the declines on Thursday. French operators Orange and Bouygues said they would extend negotiations around completing their tie-up to the weekend, saying talks were "not yet sufficiently advanced". The news sent shares of Bouygues and Orange sharply lower and also dragged down other French names in the sector including Iliad. The sector closed lower by 1.6 percent.
In the banking sector, Italy's Unicredit could delay a 1.76 billion-euro ($2 billion) rights issue for Banca Popolare di Vicenza which was set for April, according to a report by Reuters, citing sources. Unicredit shares closed 3 percent lower and dragged down other Italian banks which are also looking to raise further capital.
European investors also digested the latest set of inflation data from the euro zone on Thursday, ahead of the U.S. jobs report due out on Friday. The euro zone remained in deflation in March after official data showed that consumer prices fell again this month.
The European Union's official statistics office, Eurostat, said consumer inflation was –0.1 percent year-on-year in March, after the –0.2 percent figure recorded in February.
On the currency front, the dollar continued to weaken following Yellen's relatively dovish comments, which assuaged concerns about the possibility of an April interest rate hike. Prior to her remarks, other Fed members had made more hawkish statements. Despite the negative trade in Europe, U.S. markets were trading mostly higher.
Shares of travel firm TUI Group closed 4.9 percent higher near the top of European benchmarks after the company said summer books for 2016 are ahead of last year.
Metal prices were mixed in afternoon trade, with a number of commodity players seeing a slight recovery in later trade. ArcelorMittal led the basic resources sector, closing up over 3 percent, with Glencore and Anglo America also posting strong gains.
Randgold Resources also closed sharply higher, as gold ticked higher, heading for its best quarter in almost 30 years, according to Reuters.
"The weaker U.S. dollar has served up a degree of support for the heavyweight commodity stocks with some – including Glencore and Anglo American – managing to reverse earlier losses as we head into the close," Tony Cross, a market analyst at Trustnet Direct, said in an afternoon note.