Davies, 27, came fifth in Rio two years ago but stormed to silver in Glasgow with a time of 59.36s.
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She was narrowly beaten by Russia's Anastasiia Fesikova who clocked in at 59.19s with Carlotta Zofkova of Italy rounding up the top three.
European Championships
Sjoestroem, Peaty and Efimova end Euros with fourth golds
09/08/2018 AT 18:18
The silver is Davies' third medal of the games following gold in the 50m backstroke and in the 4x100m mixed medley relay.
Her silver came straight after fellow Brit Ben Proud also won silver in the 50m butterfly.
European Championships
GB's women take bronze in 4x100m medley relay
09/08/2018 AT 17:52
European Championships
Watch Peaty claim fourth gold as GB's men storm to 4x100m medley relay win
09/08/2018 AT 17:12