(RTTNews) - The European markets fell for the third day on Thursday, as banking stocks slipped on growing doubt that U.S. measures will revive the global economy and companies such as Cap Gemini, EDF and BT Group reported disappointing corporate results.

In economic news, the U.S. Labor Department revealed today that initial jobless claims came in at 623,000 for the week ended February 7, down 8,000 from the previous week’s revised total. Economists had expected claims to drop to a level around 610,000.

Retail sales unexpectedly increased in the month of January, according to a report released by the U.S. Commerce Department Thursday, although the sales growth was likely the result of significant discounts by retailers following the weak holiday shopping season.

The report showed that retail sales rose 1.0 percent in January following a revised 3.0% decrease in December. The increase, which came following six consecutive monthly declines, was a surprise to economists, who had expected sales to fall by 0.8%.

Excluding the increase in auto sales, retail sales still increased by 0.9% in January compared to a 3.2% decrease in the previous month. The increase surprised economists, who had expected ex-auto sales to fall 0.4%.

U.S. lawmakers yesterday debated a $789 billion plan to revive the economy. U.S. House and Senate lawmakers agreed on a compromise late in the day, a smaller bill than originally approved by both groups.

Crude for March delivery fell $0.59 to $35.35 a barrel on the New York Mercantile Exchange, by the time the European markets closed, because of growing doubts that the $789 billion stimulus package will reinvigorate the U.S. economy and demand for energy. The contract, which has closed lower every day this week, dipped as low as $34.26 a barrel earlier in the session Thursday.

The FTSEurofirst 300 index of pan-European blue chips closed 1.45% lower at 791.69 points, while the narrower DJ Stoxx 50 index fell 1.14% to 1,961.57 points.

Around Europe, the U.K.’s FTSE fell 0.76% to 4,202.24, while France’s CAC 40 index slipped 2.09% to 2,964.34 and Germany’s DAX index dropped 2.70% to 4,407.56.

BNP Paribas, France’s largest bank, slipped 5.5%, while Barclays, Britain’s third largest bank, fell 3.2% and UBS, Switzerland’s largest bank, dropped 3.8%.

Cap Gemini, Europe’s largest computer-services company, tumbled 9.1% after the company reported 2008 profit that increased 2.5% from last year but missed analysts’ estimates. The company also warned that the global economic slump would eat into sales and margins in the first half of this year.

BT Group dropped 7.8% after Britain’s largest phone company reported a 9% decline in third quarter core earnings.

EDF, the world’s biggest operator of nuclear reactors, slid 7.5% after the company said 2008 net income fell to ?3.4 billion because of costs associated with regulated power rates and lower industrial demand amid the economic slowdown.

Rexel, the world’s largest distributor of electrical equipment, lost 12% after the company posted a ?63 million fourth quarter net loss, suspended its dividend and said it will cut operating investments by 25%.

Nexans, the world’s biggest maker of cables and wires, sank 20% after the company reported 57% drop in 2008 profit.
Diageo, the world’s biggest liquor maker, fell 3.3% after the company cut its full year operating profit forecast.

Mining stocks also lost ground after copper, lead and nickel prices fell in London. BHP Billiton, the world’s biggest miner, declined 1.4%, while Anglo American, the second biggest, dropped 3.9% and copper miner Antofagasta slipped 3.5%.

Bank of Ireland slipped 16% and Allied Irish Banks lost 14% after the Irish government announced the ?7 billion recapitalization of the two banks.

On the other hand, Smith & Nephew, Europe’s largest maker of shoulder and knee implants, rose 5.1% after the company said its fourth quarter operating profit increased and that long-term demand was “favorable.”

Swiss Re, the world’s second biggest reinsurer, climbed 5% after the company said its chief executive officer Jacques Aigrain resigned.

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