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Europe shares close lower on weak German data

European shares closed lower on Tuesday, with sentiment curbed by weak economic data from Germany and a downturn on Wall Street.

The pan-European FTSEurofirst 300 closed 1.5 percent lower at 1,330.36 points.

The German DAX posted a provisional decline of 1.4 percent on the day. Market sentiment was hit by August industrial output figures for the country, which shown the worst fall in five-and-a-half years. Production slipped 4 percent month-on-month, missing forecasts.

Read MoreGerman industry output plunges most in over 5 years

"We expect production to recover slightly next month based on mean reversion alone, but the outlook for (third-quarter gross domestic product) growth has taken a significant knock with today's production number," Claus Vistesen, the chief euro zone economist at Pantheon Macroeconomics said.

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Mining stocks closed lower by a comparatively mild 0.5 percent, boosted by Rio Tinto.

Shares of Rio Tinto closed up around 0.8 percent, after it announced that it had rejected a merger approach from rival Glencore that could have created a $160 billion giant.

Glencore shares ended down by roughly 2.4 percent, having erased earlier gains.

Read MoreRio Tinto: We rejected Glencore's bid in August

In other stocks news, German airline Lufthansa shares close 5.3 percent lower. The pilots union in the country has decided to call another strike—the sixth so far this year—which will begin on Wednesday.

Airline and travel-related stocks declined after it was confirmed that a nurse had contracted Ebola in Spain. She had been part of a team treating a Spanish missionary who subsequently died of the disease.

Easyjet and Ryanair both closed down over 4 percent.

Meanwhile, shares of Cairn Energy closed around 2 percent higher after the firm announced it had discovered oil off the coast of Senegal.

US stocks decline

In the U.S., stocks fell sharply on Tuesday, extending losses into a second session, as investors fretted over signs of slowing growth in Europe and pondered the upcoming earnings season.

The third-quarter reporting period kicks off in the U.S. on Wednesday, with bellwether Alcoa reporting after the market close.

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