The pan-European STOXX 600 fell 0.8pc and was on track to log its worst week in nearly four months.
London-listed shares of Royal Dutch Shell were the biggest drag on the benchmark index, shedding 4.3pc after the company's quarterly profit halved. The wider energy subsector fell 2.4pc, also pressured by lower oil prices.
Global financial markets have seen a sharp sell-off this week as a jump in reported cases of people infected with the flu-like coronavirus raised fears of a pandemic and sparked concerns about an economic slowdown in the world's second-biggest economy.
The World Health Organization's Emergency Committee is due to reconvene on Thursday to decide whether the virus constitutes a global emergency.
"At this stage as the number of cases are growing, (the selloff) is just a normal reaction in (anticipation) for what could be the final impact," said Gilles Guibout, head of European equities strategies at AXA Investment Managers.
"Could the coronavirus be a black swan? Yes, maybe for the (companies) most exposed to the China segment."
European miners slid 0.7pc on Thursday on growth concerns in the world's top metals consumer.
Losses in flight operators such as British Airways, Germany's Lufthansa and Air France dragged the travel and leisure sector down 0.8pc as airlines increasingly suspended or scaled back flights to China.
Shares of watchmaker Swatch Group slipped 4.7pc as it reported a marked drop in annual sales and forecast continuing challenges in its key Hong Kong market this year.
Other luxury brands - LVMH, Hermes, Gucci owner Kering, Moncler, Burberry - also slipped between 0.8pc to 1.8pc.
German-Spanish turbine manufacturer Siemens Gamesa tumbled 7.8pc and was on course for its worst day in six months after cutting its 2020 profitability target for a second time in three months.
On a bright note, Sweden's H&M climbed 9.5pc after delivering its first increase in annual profit since 2015, while Finnish engineering group Wartsila jumped 6.4pc as it raised its quarterly demand outlook.
Investor attention now shifts to the Bank of England's interest rate decision due later in the day, with expectations of the first rate cut in more than three years standing at nearly 50pc.