European stocks ended flat or down on Thursday with disappointing US data erasing gains made on hints from a European Central Bank council member about a possible eurozone interest rate cut.
Sentiment was also boosted after Germany's parliament approved an international bailout package for stricken eurozone member Cyprus by a large majority, but rumours about a French bank running into trouble briefly sent markets sharply down.
In foreign exchange activity, the European single currency firmed to $1.3075, from $1.3028 late in New York on Wednesday.
Gold rose to $1,393.75 an ounce on the London Bullion Market from $1,392. It had Tuesday struck a two-year low at $1,321.95 on weaker-than-expected Chinese economic growth data.
"Europe's markets initially had a slightly more stable tone today" on the German approval of the Cyprus bailout and a successful Spanish bond auction, said CMC Markets UK analyst Michael Hewson.
"In the afternoon session however equity markets started to roll over on vague chatter that a French bank might be in trouble and this, in turn, sent banking stocks sharply lower," he added.
European equities had fallen sharply on Wednesday, after Bundesbank chief and ECB council member Jens Weidmann declared that the eurozone's sovereign debt crisis could take a decade to overcome.
However, markets recovered on Thursday as investors concentrated on more supportive comments from Weidmann.
The ECB could cut interest rates if new information warranted such a move, but might not actually prove very effective, he said.
"We might adjust in response to new information (but) I don't think that the monetary policy stance is the key issue," Weidmann -- president of Germany's central bank the Bundesbank -- told the Wall Street Journal in an interview.
"The market reaction was more pronounced than usual due to the fact that while other ECB board members have gone on record as suggesting rates might need to be lower, at no time has Mr Weidmann ever suggested he might also lean in that direction," said Hewson.
Markets had also been hit Wednesday by swirling speculation over a possible credit rating downgrade for Germany.
However on Thursday, international ratings agency Moody's issued a credit update maintaining Germany's top "Aaa" rating, albeit with a continued negative outlook.
The agency emphasised, however, that its annual credit report on Germany "is an annual update to the markets and does not constitute a rating action".
In company news in London, GlaxoSmithKline (Other OTC: GLAXF - news) shares rallied 3.17 percent to 1,658 pence after the drugs maker received a US recommendation for approval of its Breo Ellipta inhaler treatment for chronic obstructive pulmonary disease (COPD).
In Paris, meanwhile, French supermarket giant Carrefour (Paris: FR0000120172 - news) saw its share price slide 1.07 percent to 20.41 euros after announcing a 7.5 percent drop in 2013 first-quarter sales compared with the same period a year earlier.
US stocks slid on Thursday, weighed down by the Conference Board's index of leading economic indicators turning in an unexpected drop of 0.1 percent in March, the first decline since August 2012.
In midday trading, the Dow Jones Industrial Average shed 0.42 percent to 14,557.30 points.
The broad-based S&P 500 lost 0.53 percent to 1,543.82 points, while the tech-rich Nasdaq Composite Index fell 0.86 percent to 3,177.23 points.
The mixed results came on the heels of Wednesday's sharp losses that followed weak earnings reports and dreary economic sentiment in Europe.
Markets are troubled by the "pummelling" that copper and other commodities have taken in recent days, said Briefing.com analyst Patrick O'Hare.
The drop in base metals "has raised a number of flags as it pertains to the growth outlook," O'Hare said. "Also, burgeoning concerns about the goings-on in China and renewed concerns about the state of the eurozone are acting as headwinds."
Asian markets mostly fell Thursday after losses on Wall Street overnight, with Tokyo skidding down 1.22 percent, Seoul shedding 1.24 percent and Sydney losing 1.60 percent.
Hong Kong slid 0.26 percent while Shanghai bucked the trend with a 0.17 percent gain.