European stock markets closed lower on Thursday, extending losses on fresh nerves about the health of the global recovery after key Chinese growth figures fell short of expectations.

Dealers said recent strong gains in the euro, which jumped to 14-month highs on Wednesday above the key $1.50 level, may have hit sentiment because it could undercut eurozone exports, a key driver for the eurozone.

China's economy expanded 8.9 percent in the third quarter, returning to robust growth but was below forecasts for a gain of 9.1 percent.

Analyst comment on the data suggested that the economy was now growing fast enough for Beijing to begin to withdraw some of its massive stimulus support but could be a double-edged sword.

Many have voiced concern that governments anxious to rein in their huge stimulus spending might do so too soon, jeopardising a still fragile recovery.

Investors were also jittery amid some critical comment that mostly strong US corporate results reflect gains made by cost and job cutting rather than an underlying increase in their business, dealers said.

Mixed US new jobless claims data added to the cautious tone although Wall Street was higher after a positive report on leading indicators.

The choppy picture encouraged profit-taking and more discussion of whether a massive advance from the lows in March really is justified by the improvement in economic fundamentals.

In London, the benchmark FTSE 100 index of leading shares lost 0.96 percent to 5207.36 points and in Paris the CAC 40 fell 1.35 percent to 38290.85 points. In Frankfurt, the DAX shed 1.21 percent to 5762.93 points.

On Wall Street, the blue-chip Dow Jones Industrial Average was up 0.44 perccent and just below the key psychological level of 10 000 points at around 1600 GMT.

Dealers said US figures showing new jobless claims for the week to October 17 rose 2.1 percent to 531 000 compared with forecasts for a fall to 515 000 dented sentiment although other readings in the report were more positive.

The claims report "isn't all that hopeful," said Patrick O'Hare of Briefing.com.

"Statistically, the change is negligible but in the real world it is a telling reminder that the labor market remains extremely weak 22 months into the official recession," O'Hare said.

Charles Schwab & Company analysts were more upbeat, saying in a clients' note that "the sting from the jobs data was soothed by components of the report still suggesting a favorable trend in unemployment claims."

Additionally, company results have been positive, "adding to the upbeat sentiment regarding the health of the corporate sector," the analysts said.

John Murphy of ODL Securities said that while the markets have rallied strongly since March, "one can?t help but feel that there is a lingering sense of underlying nervousness."

Elsewhere in Europe, Amsterdam tumbled 1.48 percent, Brussels fell 0.83 percent, Madrid lost 0.39 percent, Milan shed 1.50 percent and Swiss stocks were off 0.45 percent.

In Asia trade earlier on Thursday, investors followed Wall Street which dropped 0.92 percent on Wednesday after a late sell-off in the banks after an analyst downgrade for Wells Fargo.

Tokyo lost 0.64 percent, with sentiment also hit by the Chinese growth figures.

Hong Kong fell 0.48 percent, Shanghai was off 0.62 percent and Sydney down 0.53 percent.