European shares closed lower on Tuesday, after weak economic data weighed on sentiment and new tax rules in the U.S. hit international pharmaceuticals.
The pan-European FTSE Eurofirst 300 Index closed provisionally 1.3 percent lower at 1,375.14 points. France's CAC 40 and Germany's DAX closed provisionally down 1.9 percent and 1.6 percent respectively.
Earlier in the day, fresh data showed business activity in the euro zone slipped again in September, with growth in both manufacturing and the services sector slowing. Markit's flash composite Purchasing Managers' Index (PMI) came in at 52.3, below a Reuters forecast of 53.5.
European markets
Tesco falls again
Shares in U.K. supermarket Tesco closed down around 4.2 percent, weighing on the FTSE 100 index for a second day. The supermarket chain is battling with the fallout from an apparent £250 million ($409 million) accounting error. On Tuesday, it announced that Alan Stewart—who previously worked at Marks & Spencer—would start as finance director three months earlier than previously planned.
Read MoreTesco crisis deepens as sales fall and new CFO joins
News that the U.K.'s budget deficit widened in August, also weighed on the FTSE on Tuesday. The index closed unofficially 1.4 percent lower.
Shares of AstraZeneca and Shire closed down respectively 3.6 percent and 2.5 percent after the U.S. Treasury looked set to scupper deals involving the two pharmaceutical companies. The Treasury announced action on Monday against tax inversions—when a company buys a foreign firm in order to switch its headquarters to a country with lower tax rates.
Read MoreTax inversion move: Bitter pill for deals to swallow
Fear of a crackdown on inversions also weighed on U.S. stocks, which declined on Tuesday.
Sentiment on Wall Street was also hit after the U.S. announced it had launched airstrikes in Syria. The bombing began at approximately 8:30 p.m. ET on Monday, killing dozens of Islamic State fighters and other militants, and widening fighting in the Middle East.
In other stocks news, shares of Tate & Lyle closed nearly 17 percent lower after the U.K. sugar refiner issued a profit warning on Tuesday.
Plus, shares of Austrian bank Raiffeisen Bank closed over 10 percent lower after it warned of an annual loss due to ongoing events in Ukraine.
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