European equities were sharply lower on Thursday following a sell-off in the U.S. Wednesday and a lackluster lead from Asia.

The pan-European Euro Stoxx 600 Index (STOXX: .STOXX) was lower with major bourses like the German DAX (XETRA: .GDAXI) posting heavy losses.

Concerns over escalating political chaos in Yemen are weighing on market sentiment. Oil prices surged as much as 5 percent after Saudi Arabia announced it began military operations in Yemen on Wednesday to fight Houthi militants who aim to topple Yemen’s government.

The operation involves 10 countries, including Gulf nations, and will receive logistical support from the U.S. However, American forces will not participate in military action, the White House said. Yemeni President Abed Rabbo Mansour Hadi reportedly fled Aden on Wednesday as militants moved closer to the city.

Marius Paun and Jonathan Sudaria, two dealers at Capital Spreads believe that the tensions are just one aspect of the current market selloff.

“A cacophony of bearish news in the form of weak U.S. data, ‘Grexit’ jitters and an escalation of fighting in Yemen all conspired to bring markets down yesterday and there is no let-up in the bearish sentiment this morning,” they said in a note on Thursday morning.

February’s durable goods orders from the U.S. posted a decline on Wednesday. Michael Hewson, the chief market analyst at CMC Markets, said that investors appear to be caught in two minds as to the health of the U.S. economy.

“(U.S. economic data) has served to undermine investor confidence further, and saw U.S. markets close sharply lower again last night,” he said in a morning note.

In other news, the crash of the Germanwings A320 plane remains in the spotlight as investigators try to ascertain how and why the accident on Tuesday, in which 150 people were killed, happened.

The New York Times reported Thursday that an investigator said evidence from a cockpit voice recorder indicated one pilot left the cockpit before the plane’s descent and was unable to get back in .

Greece also remains in the headlines. On Wednesday, Greece failed in a bid to secure a quick cash payment from the euro zone rescue fund to help stave off potential bankruptcy next month , Reuters reported, raising pressure on Athens to deliver a convincing reform program within days.

Athens had appealed for the European Financial Stability Facility to return 1.2 billion euros ($ 1.32 billion) it said it had overpaid when it transferred bonds intended for bank recapitalization back to the Luxembourg-based fund this month. Euro zone officials agreed that Greece was not legally entitled to the money, however, Reuters said.

In individual stocks news, Russian lender Sberbank (Moscow Interbank Currency Exchange: SBER03-MZ) posted better-than-expected net profit for 2014; shares climbed over 3 percent in early deals.

IAG (London Stock Exchange: IAG-GB) shares dropped 5 percent after a report in the Financial Times said that Etihad Airways would be willing to sell its stake in Aer Lingus to the airline group.

LSE Group (London Stock Exchange: LSE-GB) shares tanked 8 percent after Bourse Dubai sold its stake in the company.

Follow us on Twitter: @CNBCWorld

More From CNBC

  • News Page
  • Blogs Page
  • Earnings Central