European shares fell across on Thursday as Spain's political showdown with Catalonia deepened, and a batch of third-quarter results brought some disappointments for investors.

The pan-European STOXX 600 accelerated losses to 0.6 per cent after Catalonia failed to meet a deadline set by Madrid to renounce its independence bid, setting Prime Minister Mariano Rajoy on course to impose direct rule on the region.

Madrid's IBEX was down 1 per cent, lagging other markets. London's FTSE, Paris's CAC 40, Frankfurt's DAX and Milan's FTSE MIB were down 0.6 per cent, 0.5 per cent, 0.6 per cent and 0.9 percent, respectively.

Bank stocks fell back 0.7 per cent as Spanish lenders came under pressure, while Spanish government bond yields rose.

“The market is going in risk-off mode", said Pierre Martin, a senior sales trader at Saxo Bank a few minutes after the latest developments in the Spanish crisis hit the headlines.

Earlier, markets had retreated only slightly, after underwhelming third quarter trading updates.

Shares in advertising group Publicis fell more than 6 per cent after third-quarter sales were below market forecasts, while German forklift truck and robotics maker Kion was down 9.2 per cent after it cut its 2017 guidance. Unilever fell 4.5 percent as its underlying sales growth missed analysts' consensus.

Martin argued that while the initial reaction from investors seemed to be negative, it was still too early to get a clear picture of Europe's third quarter earnings season.

French retailer Carrefour and spirits group Pernod Ricard were up 2.8 per cent and 2.1 per cent, respectively after their results. But Martin said the situation in Catalonia was likely to set the tone for the day.

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