By Sara Sjolin, MarketWatch

LONDON (MarketWatch)--Russian stocks posted the biggest losses in Europe on Thursday after the European Union agreed to levy new sanctions against Moscow starting Friday.

The rest of Europe also headed lower, with the benchmark index in the red for its fifth straight day.

The major indexes had started in positive territory Thursday morning after a poll on the Scottish referendum put the pro-union campaign back in the lead, but gains then fizzled.

Russia sanctions: The Russia-Ukraine conflict was back in the spotlight after the European Union said it would launch its new package of sanctions on Russia on Friday, ending a standoff that has lasted for most of the week. The 28 member states agreed on the sanctions Monday, but held off on implementation as they watched if Russia would work to scale back tension in Ukraine.

Market reaction: Russia's MICEX index lost 1.3% to 1,449.63 on the back of the sanctions, while the smaller RTS index slid 1.7% to 1,217.88. The ruble (USDRUB) also slumped against the dollar, so that the greenback bought 37.518 rubles, up 0.4% according to FactSet.

More broadly in Europe, the Stoxx Europe 600 index fell 0.1% to close at 344.27. France's CAC 40 index lost 0.2% to 4,440.90, while Germany's DAX 30 index dropped 0.1% to 9,691.28.

The U.K.'s FTSE 100 index lost 0.5% to 6,799.62. The pound (GBPUSD) climbed to $1.6226 from $1.6202 Wednesday afternoon in New York, getting a lift from the survey pointing to a "no" for Scotland's independence.

RBS and Lloyds boost: Shares of Royal Bank of Scotland (RBS) and Lloyds Banking Group (LYG) rose 1.1% and 1.2%, respectively, after the banks warned they would relocate to England if Scotland votes to leave the U.K. at the referendum on Sept. 18.

Data: German inflation was stuck at a 4 1/2-year low of 0.8% in August, data from the Federal Statistics Office confirmed on Thursday. Inflation in France was 0.5% in August as expected.

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