A welter of unpromising economic data and continued concerns about Spain's bailout plans sent European markets sharply into reverse.
Retail sales in Japan fell more than expected in July while the Federal Reserve's Beige Book survey spoke of weaker conditions. Closer to home, German unemployment rose for the fifth month in a row in August, although the unemployment rate of 6.8% was in line with expectations, while economic confidence in the Eurozone fell more than expected in August, with the economic sentiment index sliding to 86.1 from 87.9 in July, versus economists' expectations of a reading of 87.5. The index has not been this low since late in 2009.
Spain's consumer price index rose at a 2.7% year-on-year clip in August (Consensus: 2.2%).
Italy's Treasury auctioned around €7.3bn in medium and long-term debt today, slightly below the top end of the range targeted.
Carrefour no longer a basket case
On the company news front, Carrefour, the world's second-largest retailer by sales, plans to cut up to 600 jobs in France as part of its chief executive officer's new cost-cutting plans.
Second quarter sales in Asia (+14.0%) and Latin America (+2.7%) helped offset considerable weakness in Europe, especially in peripheral countries such as Italy and Spain where they dropped 5.5% and 5.3%, respectively.
Recurring operating income for the first six months of the year came in at €796m, above the €705m estimate.
After having cut guidance five times in just two years, the worlds's second largest retailer said this time that it feels "comfortable" with consensus estimates for 2012. Chief executive Georges Plasset assured investors that "the past is behind us, we need to look ahead".
Shares of media group Vivendi were wanted despite the company reporting a slide in first-half operating profit; management settled investors' nerves by reiterating its 2012 profit targets.
Morgan Stanley dampened enthusiasm for car manufacturers as it issued a report suggesting that the market for new cars in the European Union is back to 1980's levels. The US bank warned that any further tailing off of demand would prompt it to cut its earnings estimates.
Drinks maker Pernod-Ricard was also off the pace after organic growth of its operating profit in the year to the end of June came in at 9.0%, missing the 9.6% increase forecast by investment analysts.
Dutch banking group ING has agreed to sell ING Direct Canada to Canadian lender Scotiabank for C$3.1bn, or around £1.98bn.
Euro declines after Spain dithers over bailout
The euro lost ground to the greenback after Spain's Prime Minister, Mariano Rajoy, said his government wants to see what the aid conditions are exactly before it commits itself to asking for a bailout from the EU.
The euro eased to $1.2497 late in the afternoon having been buying around $1.2544 in the lunchtime session.
Speculation that oil producers in the Gulf of Mexico would grind back into action now that Hurricane Isaac has moved on sent US oil prices
into decline, but the front month Brent crude future contract rose by 49 cents to $113.03 per barrel mark on the ICE.
DAX - Risers
Metro € 24.27 +2.12%
Deutsche Lufthansa € 9.76 +0.54%
Beiersdorf €57.18 +0.03%
DAX - Fallers
Daimler € 39.06 -5.53%
BMW € 57.35 -4.75%
VW € 139.10 -3.97%
CAC 40 - Risers
Carrefour (CA) € 16.81 +6.73%
Vivendi (VIV) € 15.60 +3.28%
Essilor International (EI) € 70.59 +2.53%
Credit Agricole (ACA) € 4.31 +0.37%
Cap Gemini (CAP) € 29.30 +0.10%
Safran (SAF) € 27.94 +0.05%
CAC 40 - Fallers
Michelin (ML) € 56.04 -3.86%
Peugeot (UG) € 5.96 -3.86%
Renault (RNO) € 36.74 -3.56%
Bouygues (EN) € 19.33 -3.13%
ArcelorMittal SA (MT) € 11.56 -2.69%
Pernod Ricard (RI) € 85.66 -2.42%
LVMH (MC) € 129.20 -2.12%
AXA (CS) € 11.35 -2.03%
Societe Generale (GLE) € 20.47 -1.85%
Air Liquide (AI) € 93.57 -1.82%