London's Financial Times-Stock Exchange 100 index fell 19.50 points, or 0.37%, to 5,255.70.
Hilton Group fell despite good interim figures, as investors focused on poor numbers from its betting arm Ladbrokes. Profits at Ladbrokes fell 6.3%. The leisure group said looking forward, the trends at Hilton and Ladbrokes remain positive.
Germany's DAX index lost 59.94 points, or 1.22%, to 4,856.01. Ifo, measuring German business sentiment, unexpectedly worsened in August, the first decline since May, and reflecting some uncertainty ahead of Germany's snap general election on Sep. 18, which has been cleared by Germany's highest court.
On the corporate news front, Allianz fell after the company said it will lose its China life insurance broker Dazhong Insurance, which has a 49% stake in the venture and wants to concentrate on property and casualty insurance. Deutsche Bank fell after it confirmed it is the target of Parmalat's lawsuit, but says the complaint is without foundation. The presence of hedge funds in DaimlerChrysler raises fears the funds will use their position to break up the auto giant.
In Paris, the CAC 40 index fell 45.92 points, or 1.04%, moving to 4,378.51.
A retreat in oil prices was used as an opportunity to cash in on energy stocks: index heavyweight Total lost 0.96%. Local newsflow was light as August draws to a close. SocGen remained under pressure after selling its leftover 2% stake in Spain's Santander. France Tel sank as the state launched a probe into an alleged collusion with Vivendi's SFR and Bouygues. Air France hit turbulence as Brussels planned to introduce a 'black list' of unsafe carriers.
In M&A action, Areva received today four offers for its FCI unit that may not meet the figures expected by CEO Anne Lauvergeon. L'Oreal was lower as Cinco Dias reported the cosmetics group is in talks with Sara Lee over its Delial suntan cream business.
Asian markets finished mixed Thursday.
Japan's Nikkei 225 index fell 97.10 points, or 0.78%, to 12,405.16 as the slide on Wall Street overnight and rise in oil prices presented an opportunity to take profits after recent gains.
Banks such as Mitsubishi Tokyo and Sumitomo Mitsui, which had led the market higher in recent days, led the TOPIX index lower by index points. Local media report selling by foreign investors that had snatched up shares over the past week.
In Hong Kong, the Hang Seng index gained 15.25 points, or 0.10%, to 14,889.10. The market was helped by gains in shares of oil companies such as CNOOC, after crude oil prices surged, according to Standard and Poor's MarketScope. Trading was somewhat cautious as market participants awaited earnings announcements from large-cap names Hutchison Whampoa and Cheung Kong Holdings after the close of trading.