London's FTSE 100 index of leading shares dipped 0.28 per cent to 5,983.34 points, and in Paris the CAC 40 dropped 0.74 per cent to 4,036.59 points.
In Frankfurt, the DAX bucked the trend to close up 0.14 percent at 7,193.68 points.
Elsewhere in Europe, Swiss stocks ended off 0.13 percent, Brussels slipped 0.14 per cent, Lisbon dipped 0.41 per cent, Amsterdam shed 0.68 per cent, Milan dropped 0.93 per cent, and Madrid fell 1.36 per cent.
In foreign exchange trade, the euro ran into profit-taking ahead of an interest rate call from the European Central Bank (ECB), and fell further thereafter, suggesting markets had curbed expectations of an early rate hike this year.
The shared eurozone unit retreated to $1.3648, compared with $1.3808 late in New York on Wednesday.
The euro had recently won support from speculation that eurozone interest rate hikes were likely to rise earlier in this year rather than later.
The dollar was relatively stable against the yen, buying 81.49 yen in late London trade on Thursday against 81.54 on Wednesday.
Global financial markets have been on edge this week over ongoing violent unrest in Egypt, where protestors have demanded the resignation of President Hosni Mubarak.
Protests have continued to plague the country, despite Mubarak's announcement on Tuesday that he will not stand for re-election later this year.
The unrest has pushed world oil prices above $103 per barrel for the first time in more than two years, as traders fretted over the impact on global energy supplies to the West.
"Markets may have been cheered earlier in the week over hope that the uprising we have seen in Egypt would conclude quickly, but the positive sentiments appear to be waning with a growing number of the population uncomfortable over Mubarak's aim to stay in power until September," said IG Markets analyst Peter Stanhope.
US stock markets fell in early trade Thursday despite fairly positive news on jobs, retail sales and the service sector.
At 1700 GMT the Dow Jones Industrial Average had managed to climb back into positive territory, gaining 0.02 per cent to 12,044.43, while the broader S&P 500 was down 0.15 per cent to 1,302.01.
The Nasdaq Composite index was off 0.01 per cent to 2,749.39.
Analysts at Briefing.com said the ongoing turbulence in Egypt was behind the bearish sentiment at the opening of trading.
"Concerns about conditions in Egypt have been rekindled as reports indicate that protests have become more violent than peaceful," they said.
Investors shrugged off positive indicators on the economy: Unemployment claims continued their five-month downward trend; January retail sales were buoyant; and a key measure of growth in the services sector hit its highest level in three years.
The reduced prospects of an early rate hike and the ECB indicating that it sees inflation to still be in check over the medium-term helped ease yields on bonds from core eurozone members, which had been increasing lately.
The yield on the 10-year German Bund dipped to 3.212 per cent from 3.257 per cent on Wednesday. The yield on French 10-year bonds dropped to 3.585 per cent from 3.606 per cent.
Yields on bonds from peripheral eurozone countries rose modestly.
Outside the eurozone, the yield on 10-year British Gilts rose to 3.775 per cent from 3.761 per cent.
In London on Thursday, the euro changed hands at $1.3648 against $1.3808 in New York late Wednesday, at 111.23 yen (112.62), £0.8448 (0.8528) and 1.2897 Swiss francs (1.2983).
The dollar stood at 81.49 yen (81.54) and 0.9448 Swiss francs (0.9397).
The pound was at $ 1.6154 (1.6189).
On the London Bullion Market, the price of gold fell to $1,328 an ounce from $1,337 late on Wednesday.
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