Europe's main stock markets sank on Wednesday, with the banking sector sliding after the European Union slapped huge fines on six banks over rate-rigging.
Sentiment was also hit after eurozone data highlighted falling retail sales, and slower-than-expected expansion in the manufacturing and services sector.
But European stocks pared their losses after mixed US data sent Wall Street higher as markets continued to guess at when the Federal Reserve will begin scaling back the amount of stimulus it injects into the economy.
London's benchmark FTSE 100 index ended the day down 0.34 percent at 6,509.97 points, while Frankfurt's DAX 30 fell 0.90 percent to 9,140.63 points and the CAC 40 in Paris shed 0.57 percent to 4,148.52 points.
Madrid dropped 0.67 percent and Milan slid 0.27 percent.
The EU announced Wednesday it has imposed a record 1.7 billion euros ($2.3 billion) in fines on six institutions for rigging key interest rates that affect transactions around the world.
"Yet another blow for European banks who already face a number of difficulties in managing their balance sheets, but the fines are the price to be paid for flouting regulatory rules and fixing markets," VTB Capital analyst Neil MacKinnon told AFP.
Chief among the banks fined were Germany's Deutsche Bank, France's Societe Generale and Britain's state-rescued Royal Bank of Scotland.
Investigations are continuing concerning French bank Credit Agricole, Britain's HSBC and US bank JPMorgan.
'More hefty fines possibly still to be dished out'
"Some of the banks involved in the rigging scandal, especially Deutsche Bank, received rather hefty fines for the part they played," said Markus Huber at London-based brokerage Peregrine & Black.
"In the short term, these fines will have a negative impact on earnings, but ... in the long term, the main damage will be to the image and reputation of the individual banks," he said.
"Finally, not all potentially involved banks have settled their fines yet, with more hefty fines possibly still to be dished out."
In reaction to the news, Deutsche Bank shares shed 0.98 percent to 34.33 euros in Frankfurt.
And in Paris, Societe Generale's share price fell 1.0 percent to 40.38 euros, while Credit Agricole shed 1.44 percent to 9.01 euros.
In London, Barclays stock slid 1.28 percent to 262.8 pence, while RBS eked out a gain of 0.03 percent to 331.1 pence.
Europe's banking sector was already under pressure after Asia-focused bank Standard Chartered, not affected by the rate case, warned that its annual income would be "broadly flat".
The London-based lender saw its shares tumble 6.5 percent to 1,338.50 pence, topping the FTSE 100 fallers board.
European stock markets had also fallen sharply on Tuesday as strong US data sparked talk that the Federal Reserve could soon start tapering its stimulus.
Investors were also awaiting interest rate decisions in Britain and the eurozone on Thursday.
In foreign exchange activity, the euro eased to $1.3555 from $1.3589 late in New York on Tuesday. The dollar was meanwhile steady at 102.46 yen from 102.48.
The euro was flat at 82.89 pence against the British pound, which was lower at $1.6353.
US stocks treaded water on Wednesday on mixed economic data.
The Dow Jones Industrial Average edged up 0.01 percent to 15,915.97 points in midday trade.
The broad-based S&P 500 0.50 added 0.01 percent to 1,795.27, while the tech-rich Nasdaq Composite Index rose 0.16 percent to 4,043.76.
US private-sector hiring surged to 215,000 net new jobs created in November, payrolls firm ADP said. And the US foreign trade deficit narrowed to $40.6 billion in October on a strong rise in exports.
But the Institute for Supply Management's purchasing managers index for service sector activity fell to 53.9, below the 55 seen by analysts.
Stocks moved into positive territory shortly after the ISM report was released, suggesting markets may see the report as implying a slower timeframe for the Fed to reduce its stimulus.