European shares suffered deep losses on Thursday after earlier data from the Eurozone showed the important German IFO business climate down to 106.2 in August from July's 108.3, while analysts expected a rise to 108.5.

Lower oil prices also weighed on commodity shares in Europe, with the pan-European FTSEurofirst 300 index slumping 1.12% to trade at 1,340, while Germany's DAX shed 1.11% to hover around 10,505.

Oil prices plummeted yesterday, while steadying today on short-covering, with Brent crude futures flat at $49.08 a barrel, while U.S. crude futures added eight cents, or 0.18% to trade at $46.86 a barrel.

The dollar lost ground as well, falling 0.13% against a basket of six major rivals to 94.2, while the greenback retreated 0.20% against the euro to 1.1286.

Investors await an array of major U.S. data later, with unemployment claims expected to have risen last week to 265 thousand from the previous reading's 262K, which could weigh further on the dollar.

Durable goods orders on the other hand are forecast to have risen 0.4% m/m in July, reversing from June's 0.4% slide, which would raised prospect of a Fed rate hike later this year.