London and Paris stocks shed a little less than one percent in value while Frankfurt eked out a modest gain following a German holiday closure the day before.
The Dow and Nasdaq indices were also in the red in early New York trading.
The dollar continued to brush aside other currencies except for the pound after more proof of the booming US economy sent Treasury yields surging, but Asian equities sank with more Federal Reserve rate hikes looking certain.
A forecast-busting private jobs report, a surge in activity in the services sector and optimism in the retail market were the latest evidence that the world's top economy is firing on all cylinders, helping send the Dow to a record close for the second day in a row.
However, the news also saw a sell-off in haven Treasuries -- a sign of confidence -- sending the cost of borrowing to its highest level in seven years, in turn fuelling a surge in the dollar, helping it hit an 11-month high against the yen.
- US bond yields spike -
"There's a pretty broad based sell-off seen in stock indices this morning with markets in Europe and US futures both declining as investors grow increasingly concerned about the recent rise in yields," said XTB analyst David Cheetham.
"Solid (US) employment data and a 21-year high in a widely viewed service sector survey from across the Atlantic on Wednesday ... saw US bond yields rise to multi-year highs and this makes stocks relatively less attractive."
The prospect of borrowing becoming even more expensive rattled equity traders.
Hawkish comments from Fed boss Jerome Powell also provided momentum to dollar buying.
The greenback extended Wednesday's gains against its major peers, with easing concerns about a row between Italy and EU leaders unable to staunch a sell-off in the euro.
Higher-yielding and emerging market currencies were among the worst hit.
The Chinese yuan took a hit, despite mainland markets being closed. The dollar jumped 0.2 percent to 6.9 against the offshore yuan, with some predicting it could break 7 at some point.
The US unit hit a record 73.82 Indian rupees and a fresh 20-year high against the Indonesian rupiah, with the two countries battered by surging oil prices and an outflow of cash as investors shift attention to US assets.
On oil markets both main contracts edged down after serving up yet another sharp rise on Wednesday on the back of comments from US Secretary of State Mike Pompeo and White House National Security Advisor John Bolton regarding Iran that exacerbated worries about a supply hit from the region.