- US could invade Syria amid turmoil
- US house prices increase at slower rate
- US consumer confidence grows
- German business sentiment rises
- UK services sector expands
CAC 40: -2.12%
FTSE MIB: -2.09%
IBEX 35: -2.81%
Stoxx 600: -1.68%
European stocks were in the red amid reports Western countries could attack Syria within days.
US Defence Secretary Chuck Hagel said troops in the world's biggest economy were ready to intervene after the Syrian regime was said to have used chemical weapons against civilians near Damascus on Wednesday.
Sources who attended a meeting in Istanbul on Monday between Syrian opposition leaders, US diplomats and other governments told Reuters that rebels were advised to expect military action.
The news comes after US Secretary of State John Kerry said President Obama would hold Syria's government under the Assad regime accountable for the attack.
The White House confirmed Obama spoke to global leaders about possible international responses to the conflict. The US is said to be looking at ways to invade Syria without the approval of the United Nations, where Russia would likely veto any action.
Syria's foreign minister Walid al-Moallem on Tuesday vowed the government would defend itself against any foreign attack.
The Arab League "demands that all the perpetrators of this heinous crime be presented for international trials," according to a copy of the statement obtained by Reuters.
Policymakers weigh Fed stimulus
US policymakers continued to mull over the Federal Reserve's tapering of quantitative easing.
The central bank is expected to start scaling back its $85bn per month in bond purchases at its next meeting in September so long as the economy shows enough improvement.
Also weighing on markets was remarks from Treasury Secretary Jack Lew who said the US government will reach its debt limit by mid-October unless Congress acts quickly.
The debt ceiling was last raised in January and the government can no longer borrow if the limit is reached, which is currently capped at $16.7tn
US house prices grow at slower pace
The S&P/Case-Shiller index of property values in 20 cities rose 12.1% in June from the same month in 2012 after rising 12.2% in the year ended in May, the biggest gain since March 2006 and in line with expectations.
Separately, the Conference Board revealed US consumer confidence unexpectedly jumped in August as citizens grew more optimistic about the outlook for the economy. The sentiment index climbed to 81.5 from 81 in July, beating the consensus estimate of 79.
In Germany, business sentiment increased in August as Europe's largest economy showed solid momentum. The Ifo indexes, based on a survey of 7,000 German executives, climbed to 107.5 from 106.2 in July. It was slightly higher than the 107 expected by economists.
Meanwhile, the Confederation of British Industry also revealed that Britain's services sector grew at the fastest rate in business volumes since 2007 in the last quarter.
Carmakers biggest fallers
A gauge of carmakers slid including Renault, Porsche, Volkswagen, Daimler and Bayerische Motoren Werke. They were the biggest fallers on the Stoxx Europe 600 index.
Antofagasta retreated after the miner reported a drop in first half profits due to falling copper prices.
surged after the oilfield services company said it remains on track to deliver growth for the full year.
Royal Bank of Scotland decreased following reports MPs were stepping up their campaign to have the bank split into a 'good bank' and 'bad bank'.
Polymetal International plunged after HSBC Holdings downgraded the gold miner to 'neutral' from 'overweight'.
UBM gained after UBS upgraded the publisher of InformationWeek to 'buy' from 'neutral'.
Brent crude soars as Syria tension grows
The Syrian crisis pushed Brent crude futures higher, up $2.826 to $113.960 per barrel on the ICE.
The euro/dollar rose 0.16% to the 1.3389 dollar