Weakness in bank stocks dragged European shares to a downbeat open on Thursday as financial sectors caught the cold from U.S. and Asian trading which suffered from a less hawkish than expected tone from the U.S. Federal Reserve.
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Despite the Fed's rate rise which is a boost to lenders, banks were the worst-performing sector in Europe as cautious comments from Chair Janet Yellen on persistently low inflation shook investors' confidence in financial stocks.
They dragged Europe's STOXX 600 down 0.2 percent, while euro zone blue chips fell 0.1 percent. Italy's FTSE MIB rose 0.3 percent following heavy losses in the previous session due to resurfacing political worries.
Banks HSBC, Santander, Credit Suisse and UBS were the biggest drags to the STOXX.
Attention turned to Europe's central bank meetings later on Thursday with the Bank of England and European Central Bank both expected to keep rates on hold.
Steinhoff shares sank 12.5 percent after the latest twist in the South African retailer's accounting woes, when it said it would have to restate 2016 financial results.
Dassault Aviation shares fell 2.4 percent after the firm said it plans to axe and relaunch its Falcon 5X jet after engine delays.
Safran, which provides the Silvercrest engines, also fell 2.4 percent.
Among gainers, wind turbine maker Vestas Wind rose 4.9 percent, with its Spanish peer Siemens Gamesa also up 1 percent.
In merger news, UK-listed platinum producer Lonmin's shares soared 16.5 percent after South Africa's Sibanye-Stillwater offered to buy it in a deal valued at 285 million pounds.
Meanwhile Atos fell back, down 2.8 percent, after Gemalto rebuffed the French technology consultancy's takeover offer.
(Reporting by Helen Reid, editing by Danilo Masoni)