European stock markets slumped Thursday, with most indices dropping more than 2.0 percent after Tokyo shares plunged owing to weak Chinese data and signs that the US Federal Reserve may soon taper massive stimulus measures, analysts said. London's FTSE 100 index of leading shares fell 2.10 percent to 6,696.79 points, while in Frankfurt the DAX 30 index also dropped 2.10 percent to 8,351.98 points. In Paris the CAC 40 shed 2.07 percent to 3,967.15 points, while Milan plunged 3.06 percent and Madrid slid 1.40 percent.

WASHINGTON - The number of Americans applying for unemployment benefits fell 23,000 last week to a seasonally adjusted 340,000, a level consistent with solid job growth. The less volatile four-week average ticked down just 500 to 339,500, the Labor Department said Thursday. That's close to the five-year low of 338,000 reached during the first week of May. The four-week average is 9 per cent lower than in November. "The underlying story in jobless claims continues to be one of gradual improvement," Bricklin Dwyer, an economist at BNP Paribas, wrote in a research report.

TORONTO - Toronto and U.S. stock markets racked up some losses Thursday amid a contraction in Chinese manufacturing that drove the Japanese market down to levels not seen in more than two years. The S On Wall Street, the Dow Jones industrials average fell 12.67 points to 15,294.50, the S HSBC reported that its preliminary Purchasing Managers Index for China fell to a seven-month low of 49.6 in May from April's 50.4. Analysts had expected a more modest decline to 50.3.

By Leigh Thomas and Jason Lange PARIS/WASHINGTON (Reuters) - The European Central Bank is looking into expanding its range of policy tools, while the U.S. central bank is mulling scaling back its support measures, highlighting the contrasting fortunes between the world's two biggest economic blocs.