Britain's FTSE 100 <.FTSE> index fell 0.2 percent on Thursday, in line with the broader European market.
It was a rough day for AstraZeneca (>> AstraZeneca) which lost around $13 billion (10 billion pounds) of its market value as its shares plunged 15.7 percent, its worst day on record.
The healthcare firm's combination of two injectable immunotherapy drugs, durvalumab and tremelimumab, failed to help patients as hoped in a study which was seen as key to proving the value of the group's new drug pipeline.
Analysts at Jefferies estimated that the failure of the study, known as MYSTIC, removed around 10 to 15 percent of mid-term earnings and valuation from the stock.
"With the failure of MYSTIC ... now likely to be fully factored into expectations, the dividend may now look less safe and we expect some investors will start to question its long-term sustainability, despite prior reassurances from management," analysts at Jefferies said in a note.
Wednesday's decision by the U.S. Federal Reserve to keep interest rates on hold was also weighing on the internationally-exposed FTSE, with banking stocks coming under pressure.
"The general interpretation from the Fed meeting in Europe has been that it's sending the euro and the pound higher, which is not good for our exporters," said Jasper Lawler, senior market analyst at London Capital Group.
"That environment probably exacerbated the fall we are seeing in Astra and some of the other shares as well."
It was better news for mid cap pharma stock Indivior (>> Indivior), whose shares surged 17.6 percent to the top of the European index after it reported first-quarter earnings, with Jefferies analysts highlighting a boost to the firm's operating leverage from a stronger U.S. market. [nL3N1KI30Z]
An earnings update also boosted shares in distilled drinks company Diageo (>> Diageo), which jumped 5.7 percent to an all-time high after raising its profitability target and announcing a share buyback programme.
Likewise pest control company Rentokil Initial (>> Rentokil Initial) gained 5.7 percent after reporting half-year results.
News that miner Anglo American (>> Anglo American) would resume dividend payments six months early helped its shares add around 3 percent.
The miner was forced to suspend its dividend during the commodity rout in 2015, but was helped by a rise in commodities prices last year as well as by cost-cutting measures.
Among mid-caps Acacia Mining (>> Acacia Mining PLC) jumped 15 percent, its best day in 13 months after a seven-day losing streak. Its parent company Barrick Gold (>> Barrick Gold Corp), the world's largest gold miner by production, said it would start talks with the Tanzanian government next week about an export ban which has helped wipe two-thirds of the stock's market value since it was announced in March.
(Reporting by Kit Rees; Editing by Keith Weir and Pritha Sarkar)
By Kit Rees and Helen Reid