LONDON: European stock markets closed in negative territory on Tuesday, as the United States the world's biggest economy recorded its biggest contraction in five years.
London's FTSE 100 index of top companies lost 0.79 percent to end the day at 6,733.62 points.
Frankfurt's DAX 30 slumped 0.71 percent to 9,867.75 points, while the CAC 40 in Paris fell 1.28 percent to 4,460.6 points.
The euro stood at $1.3636, up from $1.3606 late in New York on Tuesday.
"The tone of markets has remained firmly negative following a US GDP reading that has got worse with each passing revision," said Chris Beauchamp, a market analyst at IG forex specialist.
"This and the Iraq situation have been the sole macro events of note, and in neither area can traders find much comfort."
Iraq's premier rejected forming a unity government to confront militants whose sweeping offensive in the country was bolstered Wednesday when Al-Qaeda's Syrian franchise pledged loyalty to them at a border town.
The UN says nearly 1,100 people have been killed as Sunni militants led by the jihadist Islamic State of Iraq and the Levant (ISIL) overran swathes of five provinces north and west of Baghdad this month.
Losses accelerate:
Losses on the European markets accelerated after the United States reported that first quarter contraction reached 2.9 percent, much worse than the previous estimate of 1.0 percent.
Wall Street opened in the red, but later turned positive, with the Dow Jones up 0.19 percent and Nasdaq rising 0.22 percent.
In Paris trading meanwhile, shares in energy group GDF Suez tumbled after the French government announced that it had sold 3.1 percent of the group, leaving it with a holding of 33.6 percent and raising about 1.5 billion euros ($2.0 billion).
The state is expected to use the money to buy 20 percent of power-to-energy group Alstom, under a part takeover of Alstom by US group GE.
The price of shares in GDF Suez fell by 2.33 percent to 20.33 euros. But brokers Aurel BGC, which expressed some doubts about whether the state would use its option to buy shares in Alstom, said GDF Suez was also suffering from a probe by US investigators into its practices on the Texas energy market.
Emirates airline Etihad Airways tied up a deal to rescue debt-laden carrier Alitalia by taking 49.0 percent of the Italian company.
The two groups gave no details of the value of the deal or of any conditions, but two key issues are huge debt and overstaffing at Alitalia which has lurched from crisis to crisis for years.
In foreign exchange deals on Wednesday, the British pound eased to $1.6982 from $1.6985 on Tuesday.
The euro gained to 80.29 British pence from 80.11 pence. On the London Bullion Market, the price of gold declined to $1,316.75 an ounce from $1,318.50 on Tuesday.
Asian stock markets had slipped on Wednesday following the previous day's gains, while investors took their lead from losses Tuesday on Wall Street.
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