By Sara Sjolin and Carla Mozee, MarketWatch

LONDON (MarketWatch) -- European stocks fell Thursday after disappointing economic data underscored concerns about stalling growth.

The Stoxx Europe 600 index lost 0.9% to end at 338.50, dropping alongside U.S. stocks following a string of U.S. economic data, including a surprise 0.6% decline in monthly industrial production. European stocks had been weak before the U.S. data, in the wake of lackluster eurozone figures.

Banking and industrial stocks were hit, with Barclays PLC down 2.6% and conglomerate Royal Philips NV off 1.2%. French oil producer Total SA (CLM4) fell 1.6% as crude futures dropped below $102 a barrel. Also, Total's rating was cut to sector perform from outperform at RBC Capital Markets, which pointed to a strong price appreciation in Total's shares as reason for the downgrade.

Gains for the Stoxx 600 this week had pushed the pan-European index to its highest closing level since January 2008. But confirmation of a further easing in policy by the European Central Bank "will be the next catalyst for a move higher, and we can't expect markets to go much higher until then," said Ashraf Laidi, chief global strategist at City Index, in emailed comments.

Data from Eurostat showed the euro-zone economy expanded 0.2% in the first quarter, missing expectations of a 0.4% rise. Germany drove most of the improvement, with gross domestic product there rising 0.8% in the first three months of the year. That figure marked the most rapid expansion since the first quarter of 2011. In the fourth quarter of 2013, the German economy grew 0.4%.

France and Italy, however, were among those showing weakness. The French economy unexpectedly stagnated in the three-month period, Italian GDP contracted 0.1% and Portugal, Finland, the Netherlands and Cyprus also reported negative growth rates.

Chris Williamson, chief economist at Markit, said in a note that although the euro zone now has expanded for four straight quarters, the pace is still lackluster.

"The data therefore add to the likelihood of the [European Central Bank] taking action at its June meeting to inject more stimulus into the economy," he said.

But the prospect of further stimulus didn't help European benchmarks advance. France's CAC 40 index closed 1.3% lower at 4,444.93, while Germany's DAX 30 index gave up 1% at 9,656.05. The U.K.'s FTSE 100 index reversed course and fell 0.6% to 6,840.89.

Atif Latif, director of trading at Guardian Stockbrokers, said in emailed comments that the expectations of more easing from the ECB had to some extent already been priced in.

ECB President Mario Draghi said last week the central bank is "comfortable with acting" at the June meeting, with the caveat that policy makers want to see the June update of staff economic forecasts.

In the same vein, European Central Bank Vice President Vitor Constancio said Thursday that the central bank is determined to act "swiftly" if needed to battle low inflation, and didn't rule out further monetary easing. The final reading for eurozone April inflation confirmed that consumer prices rose 0.7% last month.

Additionally, an ECB survey of private forecasters showed inflation in the euro zone is likely to remain further below the central bank's target than initially projected, ramping up pressure on the central bank to act.

Movers

Among major movers in Europe on Thursday, Carphone Warehouse Group PLC shares sank 8.1% after the cellphone retailer announced an all-share merger with Dixons Retail PLC worth 3 billion pounds ($5 billion). Dixons Retail shares skidded 10%

Vodafone Group PLC (VOD) gave up 2.3% after Goldman Sachs removed the telecom firm from its pan-Europe buy list and cut the rating to neutral from buy.

Cie. Financière Richemont SA rose 4.2% after the luxury-goods company reported a 2.9% rise in annual profit.

Hennes & Mauritz AB gained 3.7% after the Swedish fashion retailer said its total sales in April, including VAT, increased by 17% in local currencies compared with the same month last year.

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