Investors reacted to more bad news for Europe on Wednesday, as economic data showed that business confidence in Germany - the region's so-called powerhouse - had fallen more than expected.
The Ifo Business Climate index slipped to 104.7 in September, down from 106.3 in August and missing analyst expectations of 105.7 in a Reuters poll. This marked its lowest level since April 2013.
The index has two components which differed slightly, with the current conditions index beating forecasts but businesses' future expectations dropping lower and missing analysts' predictions.
"The German economy is no longer running smoothly," Hans-Werner Sinn, the president of the Ifo institute said in a release. He told Reuters that the faltering euro zone economy and the Ukraine crisis continued to weigh on sentiment, but he still expected growth of 1.5 percent this year for Germany despite an expected stagnation in the third quarter.
Azad Zangana, European economist at Schroders, told CNBC the data were a "very clear sign" from German industrialists that business was slowing.
The euro weakened against the dollar after the release, although the German DAX stock index actually climbed, approaching session highs.
Traders highlighted that the slump could make it more likely that the European Central Bank (ECB) could step in with more policy measures to stimulate growth.