By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- Europe's benchmark stock index was on track for the lowest close since early May on Thursday, after disappointing French and Italian industrial-production highlighted concerns about euro-zone growth, while banking turmoil in Portugal sent the financial sector sliding.

The Stoxx Europe 600 index slid 1.3% to 335.59, setting it on track for a fifth straight day in the red.

Leading losers in the pan-European index, shares of Fugro NV tanked 20% after the oil-services company issued a profit warning for the first half of the year.

Banco Espirito Santo SA tumbled 15%, adding to a 4.7% loss on Wednesday, when reports that parent company Espirito Santo International delayed coupon payments on some short-term debt sent shivers through Portugal's financial sector. Espirito Santo Financial Group SA , the controlling shareholder of BES, on Thursday suspended trading in its own shares and bonds.

Portugal's PSI index slumped 4.2% to 6,106.38, poised to close at its lowest level since October.

The yield on 10-year Portuguese government bonds climbed 22 points to 3.97%, according to electronic trading platform Tradeweb.

The banking turmoil in Portugal spooked investors in the broader European financial sector, sending banks lower almost across the board. Shares of Banco Popolare SC shaved off 5.2% in Milan, Banca Monte dei Paschi di Siena SpA dropped 4.7%, Banco de Sabadell SA traded 4.3% lower in Madrid, and Commerzbank AG lost 3.3% in Frankfurt.

The euro (EURUSD) was also weak, sliding to $1.3618, from $1.364 on Wednesday.

Disappointing French and Italian data

Elsewhere, France's CAC 40 index lost 1.6% to 4,286.71, after May industrial production data for the country dropped unexpectedly, with manufacturing output sinking 2.3%.

Industrial output data out of Italy were also disappointing, showing production declined 1.2% in May on the month, marking the biggest slide since November 2012. The FTSE MIB index slumped 2.7% to 20,315.74.

The data reports come after German data earlier this week came in on the weak side, stirring concerns of a growth slowdown in Europe.

Germany's Economy Ministry said in its monthly report on Thursday that the weakness in the spring, coupled with geopolitical unrest, is hurting growth now, but that sentiment indicators suggest the upward trend from earlier in the year will stay intact, Reuters reported.

Germany's DAX 30 index is down 3.7% on the week so far and traded 1.7% lower at 9,644.88 on Thursday.

Among movers, BNP Paribas SA gave up 3.7% after the French bank late Wednesday pleaded guilty in U.S. federal court to a criminal charge over its dealings with sanctioned countries.

Shares of Telecom Italia SpA gained 0.3% after J.P. Morgan Cazenove lifted the company to overweight from neutral, with the analysts saying it remains exposed to consolidation upside in both Italy and Brazil.

BOE rate call

The U.K.'s FTSE 100 index fell 0.9% to 6,659.61 ahead of the monthly BOE rate decision at noon in London, or 7 a.m. Eastern Time. Analysts widely expect the central bank to keep the key lending rate at a record low 0.5% and make no changes to its 375 billion-pound ($642 billion) asset-purchase program. The pound (GBPUSD) traded at $1.7113 ahead of the decision, down from $1.715 late Wednesday.

Miners were among decliners after Chinese trade data for June surprised to the downside. BHP Billiton PLC (BHP) fell 1.2%, and Rio Tinto PLC (RIO) gave up 1.5%.

On a more upbeat note in London, Burberry Group PLC (BURBY) advanced 1.8% after the luxury-goods retailer reported a 12% increase in same-store sales in the first quarter.

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