European equities closed sharply lower on Tuesday after disappointing data from the euro zone and increased concerns that the U.S. Federal Reserve may scale back stimulus sooner rather than later.
The pan-European FTSEurofirst 300 unofficially ended down 1.5 percent at 1,280.85 points, its lowest close since October 23. Then , meanwhile, provisionally closed lower by 1.44 percent.
Basic resources stocks showed heavy selling, posting the largest sector losses, after said it would halve its capital spending by 2015 due to a fragile market. Shares of the U.K.-listed miner fell by 0.95 percent.
Also, fresh euro zone data did little to boost sentiment. A monthly producer prices index for October showed a decline of 0.5 percent, worse than expected. The yearly fall of 1.4 percent was also worse than estimates in a Reuters poll.
All of the major European bourses posted declines. The U.K.'s closed lower by around 0.8 percent, with positive U.K. data capping losses. Activity in Britain's construction industry grew at its fastest pace in six years in November, according to data out on Tuesday, bolstering the government's claims of a robust recovery.
(Read More: UK construction sector builds on recovery talk)
No Santa rally?
Global markets continued to focus on what the Federal Reserve might be looking to do with its bond-buying program, ahead of the release of U.S. non-farm payrolls data on Friday. On Monday, data showed the U.S. manufacturing sector expanded at its fastest pace in over two years last month, piquing fears of an imminent scaling back of the Fed's asset purchases.
U.S. stocks pulled mostly lower on Tuesday, with the and the Dow Jones Industrial Average extending losses into a third session, as Wall Street mulled when the Fed will cut stimulus.
UK visit to China
In other news, U.K. Prime Minister David Cameron continued his trade visit to China on Tuesday. On Monday, Cameron complained to his Chinese counterparts about their treatment of U.K. pharmaceutical giant GlaxoSmithKline after allegations it bribed Chinese doctors to sell its medicines, the FT reported.
In stocks news, shares of Commerzbank sank 3.86 percent after the German lender said there had been a search of its building by state prosecutors. The bank said it was because of alleged tax evasion by third party life insurance products.
shares of U.K. bookmaker Betfair closed higher by around 4.85 percent after it highlighted growth prospects in Italy and the U.S.
Insulin producer Novo Nordisk said on Tuesday that its pipeline was now in better shape that it had ever been; shares closed higher by roughly 0.56 percent after the announcement.
Follow us on Twitter: @CNBCWorld