The U.K.'s FTSE 100 index declined 0.5% to 5,723.00 and the French CAC 40 index lost 0.3% to 3,312.48. In Germany, the DAX 30 index ended virtually flat at 6,421.85.
Pharmaceutical and telecommunication companies weighed heavily on markets with shares of Ericsson tumbling 14.1%.
The Swedish company reported a 65% profit decline for the fourth quarter. President and Chief Executive Hans Vestberg said Ericsson "saw weaker development in networks."
Tracking the negative news from Ericsson, shares of Alcatel-Lucent fell 7.7% and Nokia Corp. dropped 1%, while among carriers, Telecom Italia SpA shed 2.5% and Telekom Austria AG moved down 1.8%.
Novartis shed 2.5% as the drug company said profitability will decline this year because of competition from generic rivals, dragging peer companies in the red.
AstraZeneca PLC traded 0.7% lower and Bayer AG fell 1.1%.
Also in the sector, Roche Holding AG surrendered 2.8% after it made an unsolicited $5.7 billion bid for DNA-technology firm Illumina Inc., offering $44.50 a share for outstanding Illumina common stock, a 64% premium.
Another big loser Wednesday, Lonza Group AG, saw shares sink 13.2% as the biotech firm ousted Stefan Borgas as chief executive.
Investors were also looking out for any signs of progress in debt talks between Greece and private bondholders to write down debt, as negotiations had come to a stalemate.
The International Monetary Fund on Wednesday appeared to push the European Central Bank to write down holdings of its Greek debt, but the central bank has resisted pressure to accept a reduction in bond value, according to the Financial Times. It holds an estimated EUR40 billion ($52 billion) of Greek debt.
"By accepting losses, the ECB would effectively be printing money to save Greece. The market hoped that would be part of the end-game solution, and that causes disappointment and sell-off," said John Ventre, fund manager at Skandia Investment Group. "This is a reminder to the market that the politicians are on their own," he said.
To avoid default, Greece must reach an agreement with creditors to secure a previously-agreed second bailout package from the IMF and the European Union.
Without the money Greece won't be able to repay EUR14.5 billion of debt scheduled to come due in March.
Banks also had a hand in Wednesday's equities pullback, but they still clinged to double-digit gains for the year.
Shares of Societe Generale SA fell 2.6% and Credit Agricole SA dropped 1.5%, extending losses from Tuesday after both banks' ratings were cut to A from A-plus by Standard & Poor's Ratings Services.
Also lower, Royal Bank of Scotland Group PLC shed 1.7%, Lloyds Banking Group PLC gave up 2.6% and Standard Chartered PLC dropped 1.2%.
"We have seen some extraordinary moves in bank shares this year, so a bit of profit-taking is understandable," Ventre said.
Markets were briefly supported by positive news from the Ifo business climate index, a closely watched measure of business sentiment in Germany, the largest European economy.
The index rose for a third straight month in January and came in at 108.3, beating expectations for a reading of 107.6.
Among Wednesday's gainers, chip maker ARM Holdings PLC added 3% in London, buoyed by robust earnings from Apple Inc. Koninklijke KPN NV rose 2.8% after an upgrade to sell from Rabobank. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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