Germany's DAX <.DAX> was the worst performer among the main country indexes, down 1.4 percent, while efforts in Italy to avert a new snap election helped Italy's FTSE MIB <.FTMIB> limit losses to 0.1 percent after a volatile session.

The pan-European STOXX 600 index fell 0.6 percent, weighed down later in the session after the U.S. said it will impose tariffs on aluminium and steel imports including from the European Union, ending months of uncertainty about potential exemptions and reigniting fears of a global trade war..

Shares in steel pipe maker Tenaris fell 3.2 percent, while steelmakers Thyssenkrupp and Salzgitter fell more than 1 percent.

Deutsche Bank however was the biggest STOXX loser, down 7.1 percent at 9.157 euros, its lowest closing level on record.

The Wall Street Journal reported that the Fed last year designated its U.S. operations to be in "troubled condition", one of the lowest designations employed by the central bank.

"The news clearly indicates the pressure Deutsche bank is under from US regulators and the need to quickly restructure operations," Thomas Hallett, banking analyst at KBW said.

"The bank has failed to sufficiently restructure the business to operate in a low interest rate and regulatory constrained environment," he added.

Deutsche declined to comment but said it was working to remedy weaknesses in its U.S. business identified by regulators.

Earlier on Thursday, German magazine Wirtschaftswoche reported that U.S. President Donald Trump wanted to block German luxury cars from the U.S. market.

Shares of BMW, Daimler and Volkswagen fell between 0.9 and 2 percent.

Elsewhere, CRH rose 3.7 percent after the Irish building materials group announced it would streamline some European and American businesses by combining them, in a move to improve profit margins.

News that Italy's Enel outbid Spain's Iberdrola with a 2 billion dollar bid for Brazilian grid operator Eletropaulo did not support the utilities' share price. Enel fell 1 percent and Iberdrola was down 1.6 percent.

(Reporting by Julien Ponthus; Editing by Kit Rees and John Stonestreet)

By Danilo Masoni and Julien Ponthus