By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets posted sharp losses on Thursday as a higher-than-expected rise in U.S. jobless claims failed to calm fears that the Federal Reserve could begin to taper its asset purchases next week.

"The jury is still out as to whether the announcement to start the tapering of QE will be made then, but arguably it's the uncertainty that's eating into markets right now," said Patrick Latchford, chief executive at Monex Capital Markets, in a note.

The Stoxx Europe 600 index closed 1% lower at 310.24, marking a third straight day of losses.

Shares of Peugeot SA slid 7.6% after the French car maker said it is taking an impairment charge of 1.1 billion euros ($1.5 billion) for its automobile division. The charge is to reflect weaker-than-expected car markets and unfavorable exchange-rate shifts in Russia and Latin America, the auto maker said. Additionally, S&P Capital IQ lowered Peugeot to sell from hold, saying the strategic risks are heightened.

Metro AG rose 2.4% after the German retailer said it sees a slight rise in sales for fiscal 2014, but that it won't pay a dividend for its truncated fiscal year that ended Sept. 30.

Fortum Oyj gained 2.4% after the utility firm said it has agreed to sell its electricity-distribution business in Finland for EUR2.55 billion.

Investors in Europe digested more data from the U.S. to gauge whether they are strong enough to trigger the Fed to taper its asset purchases next week.

Recent data have been relatively upbeat, but jobless claims rose more than expected last week and reached the highest level in two months. Meanwhile, retail sales rose 0.7% in November matching analysts expectations.

Investors shouldn't fear that potential tapering will make a notable dent in the stock markets next year, according to Peter Garnry, head of equity strategy at Saxo Bank.

"So, what will tapering mean for equities in 2014? Possibly not much. Remember that tapering is data-dependent, so the Fed will not begin to taper QE unless it feels comfortable about the trajectory of the economy. Whatever negative fantasies Wall Street has about QE ending, it will only happen when evidence of a better economy is buttressed by higher sales and earnings for companies," he said in emailed comments.

U.S. stocks were lower.

Data out of Europe showed industrial production dropped 1.1% in the euro zone in October from September, missing analyst expectations.

Germany's DAX 30 index gave up 0.7% to 9,017.00 and France's CAC 40 index lost 0.4% to 4,069.12. The U.K.'s FTSE 100 index slid 1% to 6,445.25.

Banks weighed on the indexes. Heavyweight HSBC Holdings PLC (HSBC) dropped 0.4% in London, Deutsche Bank AG gave up 0.9% in Frankfurt and Credit Agricole SA fell 1.6% in Paris.

Oil-services firms were hurt by a profit warning from John Wood Group PLC , which downgraded expectations for its engineering division. John Wood stumbled 9.9% outside the main index in London.

Within in the FTSE 100, oil-services firms Petrofac Ltd. dropped 4% and AMEC PLC gave up 5%.

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