Europe's main stock markets sank on Thursday following news that the eurozone recession deepened in the final three months of last year, but some major companies were boosted by upbeat results.
London's FTSE 100 index of top companies fell 0.54 percent to 6,325.04 points in afternoon trading, while Frankfurt's DAX shed 1.02 percent to 7,633.02 points and in Paris the CAC 40 lost 0.54 percent to 3,678.55 points.
Madrid's IBEX 35 index tumbled 1.73 percent to 8,162.8 points, hit hard by tumbling bank shares, and Milan's FTSE MIB dropped 0.95 percent to 16,552.81 points.
The European single currency touched a three-week low at $1.3315, before recovering some ground to 1.3337, still down from $1.3452 late on Wednesday. Gold eased to $1,644 an ounce from $1,645 on the London Bullion Market.
"A deeper than expected recession in Europe in the fourth quarter is weighing on sentiment," said CMC Markets analyst Michael Hewson.
The recession in the 17-nation eurozone deepened sharply in the fourth quarter of 2012 as the debt crisis continued to sap growth and confidence, official data showed.
The eurozone economy shrank 0.6 percent in the three months to December, which compared with a contraction of 0.1 percent in the previous quarter.
In the second quarter of 2012, it contracted 0.2 percent, meaning that the recession has now lasted three quarters. The eurozone had meanwhile registered zero growth in the first quarter of last year.
Analysts said the latest figures were worse-than-expected, with the major economies also now dragged down, including Germany, the bloc's powerhouse.
Compared with output in the fourth quarter of 2011, the eurozone economy contracted 0.9 percent, according Eurostat agency figures.
For the wider 27-member European Union, output fell 0.5 percent compared with activity in the third quarter of 2012 when the bloc had eked out growth of just 0.1 percent to narrowly avoid being in recession, as defined as two consecutive quarterly negative figures.
-- Bleak picture --
Compared with activity in the fourth quarter of 2011, the EU economy shrank by 0.6 percent.
Eurostat said that for 2012 as a whole, the eurozone economy contracted by 0.5 percent and the EU by 0.3 percent.
Analysts said the figures painted a bleak picture, noting that the German economy shrank by 0.6 percent in the fourth quarter compared with the third when it managed growth of 0.2 percent.
"The numbers look pretty ugly, even the robust and resilient powerhouse of Europe, Germany, succumbed to the misery of problems plaguing the eurozone," said analyst Anita Paluch at traders Gekko Markets.
"Still, even though GDP numbers are a very backward looking data, hence usually do not have huge market impact, the news is dragging markets lower as it indicates the region is struggling to get out of recession."
Despite the gloomy data, traders drew some comfort from a string of upbeat company earnings.
In Paris, BNP Paribas shares rallied 2.9 percent to 47.20 euros after the French bank said net profits rose 8.3 percent last year to 6.55 billion euros ($8.76 billion), outperforming most of its rivals.
The price of shares in French automaker Renault jumped 7.6 percent to 46.49 euros, even though the group posted a 15.3-percent drop in 2012 net profit to 1.77 billion euros. But the results were far stronger than those of PSA Peugeot Citroen.
Shares in French energy giant EDF rallied 4.1 percent to 14.82 euros after it announced a 5.3-percent gain in annual net profit and reassured over its plans to cut as much as one billion euros in costs this year.
On the downside in Madrid, shares in Spanish bank Bankia collapsed by 12 percent to 41 cents after a suspension of trading in the stock was lifted.
Trading had been suspended at the request of the market regulator CVNMV and after a publication reported that the value of the shares would be reduced to 1 cent.
Asian markets rose on Thursday, with dealers looking ahead to an upcoming G20 meeting, while Hong Kong enjoyed healthy gains as dealers returned from a long break.
Two giant M&A deals, the merger of American Airlines and US Airways, and Berkshire Hathaway's takeover of ketchup maker Heinz, failed to lift US stocks in opening trade Thursday.
Fifteen minutes into trade, the Dow Jones Industrial Average was down 0.23 percent to 13,950.27 points.
The broad-based S&P 500 dropped 0.25 percent to 1,516.51 points, while the tech-rich Nasdaq Composite shed 0.31 percent to 3,187.04 points.