By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets trimmed losses on Thursday, after U.S. business-activity data propelled gains on Wall Street, while a mixed bag of earnings and downbeat comments from the Federal Reserve kept investors in selling mode.

The Stoxx Europe 600 index lost 0.3% to 287.72, adding to a 0.6% loss from Wednesday. For the month, the index was poised to close 2.9% higher.

Meanwhile, U.S. stocks traded mostly higher on Wall Street.

"The pace of the gains over the past month has created an element of nervousness and that's a factor that has been sitting on the market for the last couple of days," said Keith Bowman, equity analyst at Hargreaves Lansdown.

"We've had some worries from yesterday's [U.S.] GDP numbers and investors are still mulling that over. At the same time they are looking toward nonfarm-payroll due tomorrow to provide a firmer figure," he added.

Shares of Ericsson LM posted some of the biggest gains in the index, up 8%, after the telecom-equipment supplier said it expects profitability to improve in the second half of 2013.

On a downbeat note, shares of AstraZeneca PLC (AZN) sank 3.3%. The U.K. drug maker warned in its quarterly earnings report that sharp declines in revenue and earnings would continue through 2013 after it lost patents on key drugs.

U.S. data

The broader European stock markets trimmed losses in late-session action, after the Chicago purchasing managers' index rose to the highest level since April 2012.

Additionally, the Labor Department said the number of people applying for jobless benefits jumped by 38,000 last week to 368,000, marking the biggest increase since the week after Superstorm Sandy.

On Friday, attention turns to the monthly nonfarm-payroll report as well as the latest reading on the unemployment rate.

Earlier in the European session, markets had showed bigger losses as investors looked to the prior day's moves on Wall Street, where stocks retreated from a five-year high on the back of a surprise contraction in fourth-quarter growth.

Additionally, the Federal Reserve maintained its aggressive monetary- easing program, citing downside risks to the economic outlook. The central bank noted that growth in economic activity paused in recent months, although mainly due to weather and other transitory factors.

"The overall assessment of the economy and the labor market was not much different than in December. On inflation, it is pretty clear that it is not going to be the binding constraint on the Fed's monetary policy," analysts at Danske Bank said in a note.

Movers

Back in Europe, most banks were under selling pressure. Shares of Banco Santander SA (SAN) gave up 2.6% after the bank's fourth-quarter earnings missed analyst expectations and net interest income declined from the year-earlier period.

Spain's IBEX 35 index slumped 1.8% to 8,422.20.

In the U.K., shares of Royal Bank of Scotland Group PLC (RBS) shed 1.4%, while sector heavyweight HSBC Holdings PLC (HBC) gave up 0.4%. The Financial Services Authority ordered the four largest U.K. banks by assets to pay out compensation to small-business customers following failings in how the banks marketed products to reduce interest-rate risks.

Royal Dutch Shell PLC (RDSB) was also lower in London, down 2.8%, after the oil group posted fourth-quarter results below views.

The FTSE 100 index dropped 0.5% to 6,292.73.

France's CAC 40 index lost 0.3% to 3,755.08, with shares of Credit Agricole SA down 0.8%.

Shares of Essilor International SA slid 2.4% as Exane BNP Paribas cut the maker of contact lenses to neutral from outperform.

Germany's DAX 30 index fell 0.2% to 7,798.40, with Commerzbank AG 0.6% lower.

The losses came even as data showed the unemployment rate in Germany dropped to 6.8% in January from 6.9%.

Shares of Deutsche Bank AG (DB) climbed 3% after the firm said it swung to a loss in the fourth quarter to clean up its business, but that underlying performance improved. and

Infineon Technologies AG jumped 4.9%, after the chip maker backed its fiscal year outlook, even as first-quarter revenue missed market expectations.

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