US jobless numbers showed a small improvement, but 457,000 Americans still filed unemployment claims for the first time last week. Durable goods orders were in line.
Banks remained under fire. BNP Paribas, Societe Generale, Credit Agricole, Commerzbank and Deutsche Bankfeature among the biggest fallers.
Sports equipment giant Adidas skidded lower after Kepler Capital Markets cut its stance to reduce from hold.
London-listed insurance firm consolidator Resolution has confirmed its acquisition of AXAs life insurance businesses, to be funded by a Ł2bn rights issue.
It will pay Ł2.75bn for the businesses. Shares in Resolution were suspended last week as it confirmed the takeover discussions for AXA's UK protection and annuities arms and also its group pensions business.
Frankfurt tumbled 89 to 6,115, the French Cac fell 86 to 3,555, while the Swiss exchange declined 61 points to 6,320.
Swedish retailer Hennes & Mauritz saw first-half net profit rise to 8.95bn Swedish kronor compared with 6.77bn kronor last year on sales up 4%.
Oil company BP said the lower marine riser package (LMRP) cap containment system was successfully re-attached on its blow-out well in the Gulf of Mexico. Yesterday, oil spewed uncontrolled back into the Gulf of Mexico after the cap containing the spill was removed because fluid seemed to be leaking.
Elsewhere, the US Federal Reserve again held its Fed Funds rate at near zero last night.
The central bank said that the "economic recovery is proceeding," but economists said the tone was more cautious than the last meeting. The Fed added "financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad."
CAC 40 - Fallers
Alstom (ALO) 38.52 -6.29%
BNP Paribas (BNP) 45.66 -5.44%
Credit Agricole (ACA) 8.81 -4.70%
Societe Generale (GLE) 35.10 -4.67%
Vallourec (VK) 144.75 -3.69%
Technip (TEC) 50.18 -3.50%
Renault (RNO) 32.40 -3.50%
Lafarge (LG) 48.33 -3.47%
Schneider Electric (SU) 85.59 -3.12%
EDF (EDF) 34.00 -3.12%