Germany's benchmark stock index entered correction territory on Wednesday, hitting a low of 9030.72 points—10.15 percent down from a high point on June 20. Strategists blamed the worsening situation in Ukraine, and weak data out of Germany.
The DAX recovered somewhat in afternoon trade, reaching 9103.28 points, but remained lower on the day.
Regarding the fall, Daniel Sugarman, market strategist at ETX Capital, told CNBC: "I think it is a combination of ramped up tensions in Russia and also to do with some pretty disappointing figures out of Germany."
Shares were hit on Wednesday after weak manufacturing data suggested Germany's economy was losing steam. Orders fell 3.2 percent month-on-month in June—the largest decline since September 2011 and worse than expected.
Manufacturing orders from abroad fell 4.1 percent, which the German Economy Ministry linked to sanctions against Russia amid the Ukrainian crisis. It cited "geopolitical developments and risks" as the dominant factor in the "clear reticence in orders".
Market fears over Russia worsened on Wednesday, on reports that the country was amassing battalion groups on the Ukrainian border, potentially to invade the country. Both European and U.S. stock declined.
"What we are seeing on our terminals now is some bargain hunters coming and buying the cheap stock," Naeem Aslam, AvaTrade's chief market analyst told CNBC on Wednesday.
"There is no doubt that the markets are in turmoil, however, it is important to remember that it is only times like this when you can buy your favorite stock cheap. When the sale labels are on display, every one start rubbing their hands."
Over the longer term, the DAX has been particularly hard-hit by developments in Russia, as it is dominated by companies that are dependent on Russian energy.
Deutsche Telekom shares also dragged down the index on Wednesday. These traded 3 percent lower in the afternoon, after Sprint retreated from its offer for Deutsche Telekom carrier T-Mobile U.S., as the deal failed to clear regulatory hurdles.
Investors now wonder if the DAX could decline further over the coming weeks to 8913, the low it reached in March.
"It is feasible, but whether it will actually happen is another debate," said Sugarman. "That depends very much on whether the European Union can come to sort of agreement with Russia and also on whether Germany's figures improve. Because this isn't the only bad number we have had out recently from Germany or indeed, the euro zone."
Meanwhile, German 10-year Bund yields fell to 1.096 percent on Wednesday—the lowest level in more than 20 years—before rising slightly to 1.103 percent in the afternoon. Germany's sovereign bonds are viewed as a "safe-haven" asset to rival U.S. Treasurys, and generally gain when investors are risk-averse.