At the close of trading on Thursday, all three key European stock exchanges reported declines of more than 3%. Investors were actively risk averse amid escalating military conflict in Western Europe.

As a result, the STOXX Europe 600 index of Europe's leading companies fell by 3.3% to 438.99 points. The main outsiders in the stock index components were securities of Russia's leading silver producer Polymetal International, which lost 37.8% of its value. Shares in Raiffeisen Bank International AG dropped by 23.1%, Bank Polska Kasa Opieki S.A. lost 14.5%, and Commerzbank AG declined by 13.1%.

The British FTSE 100 shed 3.9% to 7,207.01 points on Thursday, the French CAC 40 slipped by 3.83% to 6,521.05 points and the German DAX was down 4% to 1,4052.1 points.

Finnish tyre maker Nokian Renkaat Oyj is down by 15%. German energy company Uniper SE dropped by 14% and Polish online retailer Allegro.eu SA lost 13.8%.

Deutsche Bank AG, Germany's largest financial conglomerate, saw its shares decline by 12.5%,

German tyre and car component maker Continental AG sank by 7.5%, while car giants BMW and Porsche lost 7.2% in value. Evraz Plc, a metals and mining company, declined by 30.4% and Russian gold mining holding Petropavlovsk dropped by 27%.

Europe's banking and automotive sectors suffered the biggest losses on Thursday, dropping by 8.2% and 6% respectively. Meanwhile, the oil and gas sector fell by just 0.3% as the global price of oil rose to its highest level since 2014.

The foreign policy issue was in the focus of European stock market participants the day before. On Thursday morning, Russian President Vladimir Putin announced the launch of a special military operation in Ukraine.

In response, the Western countries have threatened Russia with harsh sanctions. Ukraine has imposed martial law. According to European Commission chief Ursula von der Leyen, the new package of sanctions against Russia will be aimed at severely restricting its access to capital markets.

Also, on Thursday, a number of major European companies reported their financial results for previous periods.

For example, British luxury carmaker Rolls-Royce managed to reduce its pre-tax loss last year. In addition, Rolls-Royce management revealed plans for CEO Warren East to step down at the end of 2022. The value of the company's shares plummeted by 13%.

Italian car tyre maker Pirelli & C SpA's shares fell by 10.4% despite the company increasing its net profit 7.5 times in 2021.

Telecommunications company Deutsche Telekom AG dropped by 5.4% in the fourth quarter. In the fourth quarter, the company's net profit declined by 72%. This figure was worse than preliminary market forecasts.

Anheuser-Busch InBev, a global brewer, lost 1.4% of its market capitalisation, despite strong earnings in the previous quarter. Anheuser-Busch InBev's net income and revenue rose above analysts' preliminary scenarios.