Most European stock markets bar London fell Tuesday on sour data and earnings before this week's US interest rate call, while the pound hit new two-year lows on no-deal Brexit fears.
Frankfurt's benchmark DAX 30 index tumbled 1.5 percent in early afternoon deals, with German airline Lufthansa sliding six percent after it posted slumping first-quarter net profits.
The Paris CAC 40 index lost 0.8 percent, hurt by figures showing France's economy stagnated in the second quarter, growing by a lower-than-forecast 0.2 percent.
London's FTSE 100 index however clung onto slender gains at midday, as the weak pound lifted UK-based multinationals who sell their goods abroad.
Both the US Federal Reserve and the Bank of England are slated on Thursday to announce the outcomes of their latest monetary policy gatherings. Expectations are that the Fed could deliver the first interest rate cut in a decade.
"The FTSE 100 is clinging on to tiny gains while European markets sink deep into the red," noted analyst Chris Beauchamp at spread-betting firm IG.
"As we get closer to the Fed decision, the sense of anticipation in markets is almost palpable. Despite the veritable storm of earnings this week, the FOMC (the US central bank's Federal Open Market Committee) trumps everything else."
He added that "eurozone equities ... are under fresh pressure (on Tuesday) following more tough earnings reports and a sour reading on French GDP".
Pound plumbs new lows
Meanwhile, the Brexit-hit pound continued to suffer as expectations grew of a no-deal British withdrawal from the European Union in October.
At about 0445 GMT, sterling sank as low as $1.2119 -- a level last seen in March 2017.
the European single currency rallied as high as 91.87 pence, matching peaks seen in September 2017.
"Prime Minister Boris Johnson said he had no intention of meeting EU leaders in person until they showed a willingness to change their position on the Irish backstop and withdrawal agreement," said CMC Markets chief analyst Michael Hewson.
"This hard line, so late in the day, appears to have prompted a sudden realisation that a no deal Brexit has suddenly become a much more likely event."
Elsewhere, Asia markets rose modestly, with investors doubtful of any major breakthroughs in the latest round of US-China trade talks getting underway in Shanghai.
The two-day negotiations in the financial hub will be the first face-to-face discussions since negotiations collapsed in May, when US President Donald Trump accused China of reneging on its commitments.
Washington and Beijing have so far hit each other with punitive tariffs covering more than $360 billion in two-way trade in the year-long dispute.
But little of substance is expected and both sides have worked to lower expectations before the meeting.
Key figures around 1100 GMT
Frankfurt - DAX 30: DOWN 1.5 percent at 12,228.52 points
Paris - CAC 40: DOWN 0.8 percent at 5,555.01
London - FTSE 100: UP 0.1 percent at 7,691.10
EURO STOXX 50: DOWN 1.1 percent at 3,484.46
Pound/dollar: DOWN at $1.2177 from $1.2219 at 2100 GMT
Euro/pound: UP at 91.53 pence from 91.21 pence
Euro/dollar: DOWN at $1.1144 from $1.1145
Dollar/yen: DOWN at 108.56 yen from 108.78
Tokyo - Nikkei 225: UP 0.4 percent at 21,709.31 (close)
Hong Kong - Hang Seng: UP 0.1 percent at 28,146.50 (close)
Shanghai - Composite: UP 0.4 percent at 2,952.34 (close)
New York - Dow: UP 0.1 percent at 27,221.35 (close)
Brent North Sea crude: UP 1.1 percent at $64.43 per barrel
West Texas Intermediate: UP 1.1 percent at $57.50