The Spanish stock index IBEX 35 failed on Thursday to extend the previous session's gains, while Asian markets oscillated between gains and losses and the yen and US bonds tried to recover in a context of nervousness due to fears of a deep downturn in the US economy.

"In the U.S., fears of a recession continue to hover. If at the beginning of the week it was Goldman Sachs who increased the probability of a recession in the US economy, today it was the turn of JP Morgan, which raises it to 35% (compared to 25% previously) by the end of the year," said Renta 4 analysts in a note to clients.

Traders expect the Fed to cut rates by 50 basis points at its next meeting in September due to the slowing economy, but are also pricing in the possibility of a lower 25 basis point reduction at 26.5%, according to CME Group's FedWatch tool.

At 0705 GMT on Thursday, Spain's selective IBEX 35 stock market index was down 113.40 points, or 1.07%, to 10,485.60 points, while the FTSE Eurofirst 300 index of large European stocks was down 0.77%.

In the banking sector, Santander lost 1.36%, BBVA fell 1.51%, Caixabank gave up 0.87%, Sabadell fell 1.29%, Bankinter dropped 0.60% and Unicaja Banco lost 1.38%.

Among the large non-financial stocks, Telefónica gained 0.07%, Inditex fell 1.52%, Iberdrola dropped 0.54%, Cellnex fell 1.82%, and the oil company Repsol lost 0.52%.

(Information by Benjamín Mejías Valencia; edited by Mireia Merino)