European shares closed lower on Thursday as a rally for banks came to an abrupt end.
The FTSEurofirst 300 index of top European shares fell 1.8% to close at 796.49, following three days of gains.
Swiss bank UBS fell 9.8% as traders cited talk of a possible loss of 1 billion Swiss francs ($US865.1 million) in the fourth quarter. UBS declined to comment.
Banco Santander, Barclays, Credit Suisse, Deutsche Bank, HSBC
and Lloyds fell between 2.5% - 11.8%.
Drugmakers were also down. AstraZeneca closed 6.3% lower after posting lower fourth-quarter profits and cutting 6000 jobs.
GlaxoSmithKline, Novartis, Roche fell between 2.7% - 3.2%.
Unemployment in Germany rose by 56,000 on the month in January - its third consecutive rise and the biggest increase in nearly four years.
In Frankfurt, the DAX index ended at 4,428.11 points, down 90.61 or 2.01%.
In Paris, the CAC-40 index closed at 3,009.75 points, down 66.26 or 2.15%.The Swiss market index closed at 5,272.9 points, down 145.03 or 2.68%.
The FTSE 100 was down 105.09 points, 2.45%, at 4,190.11, having gained 2.4% on Wednesday.
In Japan, the Nikkei stock average climbed 144.95 points, 1.79%, to close at 8,251.24 for its third consecutive day of gains. The index is up 6.5% so far this week.
Shares in Hong Kong extended an early rally to close sharply higher. The Hang Seng Index gained 4.58% or 575.83 points to close at 13,154.43.
In Australia, the S&P/ASX 200 index added 30.7 points, 0.88%, to close at 3,526.2, adding to a rise of 3% on Wednesday.
The All Ordinaries index gained 26.2 points, or 0.76%, to 3,461.3.
In New Zealand, the NZX50 was up 22 points, or 0.81%, to 2770 on turnover of $85 million at the close of trade.
All major banks dropped fixed and floating home loan rates afterwards.
Top stocks were mixed: Telecom gained 6 cents to $2.66, while Fletcher Building was up 4c to $5.52. Contact Energy was down 5c to $6.73 and The Warehouse lost 12c to $3.60.