LONDON: Stock markets turned lower Thursday as worries about the US and British economies took the shine off oil market optimism.
Wall Street at first shrugged off an unexpected rise in jobless claims but investors quickly took the view that the data, combined with a last week's weaker-than-expected US payroll, point to sluggishness in the world's biggest economy.
Macro-economic concerns were compounded by an intensifying debate about Britain's possible exit from the European Union, this time sparked by the Bank of England.
This put a dent in early upbeat sentiment from oil, which held near six-month peaks after the International Energy Agency forecast that the stubborn oil glut will "shrink dramatically" later this year.
As oil prices came off their highs, so did share markets.
Stocks "relinquished early gains as crude oil prices have turned mixed and US jobless claims surprisingly jumped," analysts at Charles Schwab said in a note.
On Wall Street, Monsanto shares leaped around 10 percent following a report that Germany's giant Bayer is mulling a takeover bid worth at least $40 billion for the agriculture giant.
In Frankfurt, where the Dax index closed 1.1 percent lower, Bayer shares dropped nearly five percent on the back of the report.
Also in Frankfurt, E.ON shares bucked the trend in a further reaction to strong results, rising 1.5 percent, while fellow energy giant RWE topped the gainers with a 6.8 percent surge.
Elsewhere in the eurozone, Paris's CAC index lost 0.5 percent at the close. Credit Agricole dropped 4.9 percent, accentuating pressure on the financial sector, as did insurer Generali's four percent decline in Milan.
In Madrid, Telefonica surged 2.2 percent after its chairman told shareholders that the EU's veto against the sale of its O2 unit to Hutchison was not a major problem for the Spanish company.
London's benchmark FTSE 100 index fell 1.0 percent as the debate on the consequences of a possible British exit from the EU returned to the fore, prompted by a Bank of England warning that uncertainty over the outcome of next month's EU referendum was already weighing on British growth.
The Bank, unsurprisingly, left leading interest rates unchanged.
"There is no urgency for the Bank of England to do anything, or even hint at any action soon," analysts at Credit Mutuel CIC said.
Asian equities mostly fell, tracking the previous day's sell-off on Wall Street.
Tokyo however bounced into positive territory thanks to a softer yen, which lifts shares of Japanese exporters because their goods become more competitive.
Shanghai's main stocks index meanwhile ended marginally lower ahead of the release of fresh economic indicators out of China this week.
A disappointing trade report at the weekend revived concerns about the world's second largest economy, while there are fears Beijing will hold off introducing any fresh stimulus after a government warning over debt levels.
- Key figures around 1600 GMT -
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New York - Dow: DOWN 0.4 percent at 17,637.63
London - FTSE 100: DOWN 1.0 percent at 6,104.19 (close)
Frankfurt - DAX 30: DOWN 1.1 percent at 9,862.12 (close)
Paris - CAC 40: DOWN 0.5 percent at 4,293.27 (close)
EURO STOXX 50: DOWN 0.7 percent at 2,935.46
Tokyo: Nikkei 225: UP 0.4 percent at 16,646.34 (close)
Shanghai - composite: DOWN 1.18 points at 2,835.86 (close)
Hong Kong - Hang Seng: DOWN 0.7 percent at 19,915.46 (close)
Euro/dollar: DOWN at $1.1382 from $1.1426 Wednesday
Dollar/yen: UP at 108.78 yen from 108.39 yen
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