European markets were rattled Thursday as a batch of ugly corporate earnings continued and more bad news on the U.S. economy piled up.

The corporate world caused a downward trend in markets Thursday, led by Deutsche Bank, which posted its first annual loss since World War II

A weak earnings statement from consumer giant Unilever added to the pessimistic outlook.

Adding to the downward pressure was more tough economic news from the United States where new claims for unemployment benefits hit a 26-year high. Also, U.S. factory orders fell for a record fifth-straight month in December by nearly four percent.

About the only bit of good news was the decision by the Bank of England to drop interest rates here by a half a percentage point to one percent.

Senior Analyst Nick Parsons from the London investment company NAB Capital says it was what the market was expecting.

"It will have an effect but I do not think the effect should be overstated," he said. "I also think that this is the last interest rate in this cycle. We do not see that interest rates will move below one percent. We do not think there is a need to do that."

The Bank of England rate is now the lowest it has ever been since the institution was created 1694.

Meanwhile on the continent, the European Central Bank decided not to drop rates this month. They remain at two percent. That was expected although some fear the ECB is moving too slowly in dealing with this growing economic crisis.