European shares ended Thursday's volatile session sharply lower as European Central Bank President Mario Draghi disappointed investors who had been expecting some bold actions since his pledge last week to do 'whatever it takes' to defend the euro.

Draghi said any new action by the ECB, which left interest rates unchanged, was conditional on euro zone governments using their bailout funds first. He also hinted German central bank chief Jens Weidmann had expressed reservations about bond-buying, but added the ECB would consider other "non-standard" measures to rein in the credit crisis.

Investors, who had pushed stocks higher before Draghi's comments on hopes of some concrete policy support, rushed to dump equities, with the FTSEurofirst 300 [.FTEU3  1055.34    -12.86  (-1.2%)   ]  index provisionally closing 1.1 percent lower at 1,056.98 points, Spain's IBEX [.IBEX  6373.40    -346.60  (-5.16%)   ] slumping 5.2 percent and Italy's FTSE MIB [.FTMIB  13282.55    -646.04  (-4.64%)   ] falling 4.6 percent.

Italian bond yields jumped 19 basis points to 6.12 percent on the news, while equivalent Spanish yields rose 7 basis points to 6.81 percent. Safe-haven German Bund futures rose 120 ticks to a session high of 144.70 on the news.

"Draghi put himself in such a difficult position that he had to deliver today and he has not. There has been a swift change in rhetoric from 'we will' last week to 'we may' today," Joshua Raymond, chief market strategist at City Index, said.

"And even though he hints towards bond purchases, all he has done is kick the can down the road. It would appear the ground continues to be laid for ECB action, but this action is not going to come this week and leaves a taste of disappointment," Raymond said.

Euro zone banks [.SX7E  79.82  ---  UNCH    ], which are exposed to several highly-indebted countries in the region, suffered the most, with the index slipping 6.2 percent and Spain's Banco Santander [SAN  5.70    -0.40  (-6.56%)   ] falling 6.7 percent.

Other sectors linked to growth also lost ground, with auto [.SXAP  298.77  ---  UNCH    ] shares  falling 2.3 percent and construction [.SXOP  224.52  ---  UNCH    ] stocks down 2 percent on concerns that in the absence of bold measures from the ECB in the near term, the region's fragile economies would continue to suffer.

Source Reuters and CNBC.com