Retailers were the focus of attention in European markets on Thursday as French supermarket group Carrefour warned it expected annual earnings growth to miss expectations.

Carrefour reiterated its current earnings guidance only two months ago, and the fresh warning suggests there has been a significant deterioration in the retail climate over the run-up to Christmas.

"These guidance downgrades are far more significant than the headlines suggest when you take into account that this shift in guidance has taken place over less than two months," said James Collins at Deutsche Bank.

"France has been a low-growth market for some time so it is no surprise to see competition intensifying as the amount of available top-line growth shrinks."

Shares in Carrefour dropped 7.1 per cent to €27.10 following the news. UK retailer Marks and Spencer also showed losses, falling 3.5 per cent to 219.5p as better than expected November retail sales data in the UK supported grocers there, but did little to help chains more exposed to narrowing discretionary spending.

Other retailers in Europe suffered less. In Sweden Hennes and Maurtiz lost was flat at per cent to €303.50 and Metro dropped 0.4 per cent to €28.50. In Spain Inditex the owner of the Zara brand fell 0.5 per cent to €31.20.

More broadly, European markets slipped as investors falling oil prices fuelled concerns about global demand.

The FTSE Eurofirst 300 was down 0.4 per cent to 828.44, the Xetra Dax was up 1 per cent to 4,755.82 and the CAC40 fell 0.7per cent to 3,219.56.

The price of oil slipping back to just over $40 a barrel in spite of Opec's stated intention to cut oil production by 2.2m barrels a day as the euro strengthened.

This led to concern for resource companies and exporters, which are both likely to suffer as a consequence. Portuguese oil and exploration company Galp Energia was among the big fallers, losing 5.3 per cent to €7.32.

High-end retailers with large export earnings were also hit as the double hit of economic slowdown and rising exchange rate affected investor confidence. Richemont was down 6.7 per cent to €20.12 and Swatch lost 3.4 per cent to €143.70.

Financials were under continued pressure after BNP Paribas led the sector and market downwards during the last session, following a stream of bad news for the company. There was continued concern for the French banking group and, more broadly, the financial sector, due to widespread exposure to the alleged $50bn Madoff fraud in the US.

BNP fell a further 3.4 per cent to €32.5, Dexia lost 1.3 per cent €2.84, Societe Generale was 4.3 per cent down at €33.34

Following on from last session Fortis again led the FTSE Eurofirst 300 after a Belgian court ruling went in its favour. The financial group was up another 11 per cent to €1.01.

Credit Suisse was also at the positive end of the market, with its shares gaining 1.3 per cent to €29.33 after the funds arm of the Swiss financial announced plans to quit managing US money-market funds, starting with the liquidation of three funds worth $8bn.