The pan-European STOXX 600 <.STOXX> index ended the day up 0.04 percent after having traded in the red most of the session.

Germany's exporter-heavy DAX <.GDAXI> index <.GDAXI> fell 0.12 percent and Britain's FTSE slid 0.4 percent.

Societe Generale shares were the biggest losers within the banking sector and on the French blue chip index CAC 40 <.FCHI>, down 5.6 percent.

The French bank said its fourth-quarter results would be affected by tough market conditions and the impact of some asset sales.

The warning hit European banking stocks <.SX7P>, which fell 1.2 percent.

"I have a preference for the U.S. banks. SocGen shows how tough things are for European banks," said Jerome Schupp, fund manager at Geneva-based investment firm Prime Partners.

Italian banks <.FTIT8300> limited their losses to a 0.7 percent fall after a top government official said on Wednesday that mergers among Italian lenders could make the banking system more solid, as the sector seeks to further cut its bad loan pile.

Early trading was marred by worries that U.S. action against Huawei could further complicate trade talks between Washington and Beijing at a time when signs of a global economic slowdown are growing.

"The severity of Thursday’s losses, initially inspired by the fear that the announced U.S. probe into Huawei would disrupt the trade talks between the country and China, seem to have been limited by the confirmation that Vice Premier Liu He will be coming to Washington for further discussions at the end of January," said Connor Campbell, an analyst for Spreadex.

Carmakers <.SXAP>, which are highly sensitive to trade and have large exposure to both the Chinese and U.S. economies, lost 0.8 percent.

U.S. Senate Finance Committee Chairman Charles Grassley said he thought U.S. President Donald Trump was inclined to impose tariffs on European cars to win better terms on agriculture.

Austrian steelmaker Voestalpine was another heavy faller, sliding 4.7 percent after another profit warning.

(Reporting by Danilo Masoni; Additional reporting by Sudip Kar-Gupta in Paris; Editing by Susan Fenton and Mark Potter)

By Danilo Masoni