The euro slid and European stocks weakened as disappointing economic statistics overshadowed more upbeat corporate news.
The Stoxx 600 index closed down 0.2% at 287.79. The U.K.'s FTSE 100 ended down 0.5% at 6327.36, France's CAC-40 ended 0.8% lower at 3669.60 and Germany's DAX slid 1% to 7631.19.
Outside Europe's core, Spain's IBEX closed 0.7% lower at 8247.40, and Italy's FTSE Mib fell 1% to 16544.95, but Greece's ASE Composite ended up 0.5% at 1032.43.
Gross domestic product figures for Germany, France and the euro zone as a whole disappointed investors on Thursday. German's GDP shrank 0.6% in the fourth quarter from the third, following three consecutive quarters of growth. The country's statistics office had forecast a 0.5% quarterly contraction.
Economic activity in France shrank 0.3% in the quarter, and GDP for the euro zone as a whole shrank 0.6%. marking the fifth straight quarter in which the currency bloc's economy failed to grow. It was the deepest rate of contraction in nearly four years.
"There was a mentality where people were going along with optimism, which happens when sentiment runs ahead of fundamentals. And then it suddenly hits people that things are not fine in the euro zone and the GDP was a trigger for that today. It's a reality check," said Alastair Winter, chief economist at Daniel Stewart Securities.
The euro fell as the news reignited fears about the health of the currency bloc. As European markets closed, the euro was trading at $1.3329, from $1.3453 late Wednesday in New York. The dollar was at �93.07, from �Y93.83.
The picture was rosier on the corporate front.
Electricite de France shares gained 2.2% after the company announced plans to cut as much as �1 billion ($1.35 billion) in costs this year, with more to come in the next two years, in an attempt to lower its debt.
Pernod Ricard SA gained 2.1% after confirming its full-year profit target despite a challenging environment in Europe.
French car marker Renault surged 7.7% after saying its global vehicle sales would continue to grow this year despite a further contraction in the European market.
On the downside, Nestle shares slipped 2.3% despite reporting better-than-expected full-year earnings.
Shares of Spanish lender Bankia sank 12%. Spain's bank bailout fund said Bankia's shareholders face considerable losses, as restructuring efforts could end in a "significant reduction" in the nominal value of the shares.
Barclays fell 2.2% after Investec Securities cut the bank to "hold" from "buy."
Among commodities, light, sweet crude for March delivery was up $0.39 at $97.40 on the New York Mercantile Exchange. Gold for April delivery on Nymex's Comex division was down $3.70 at $1641.40.
Write to Michele Maatouk at michele.maatouk@dowjones.com
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