European shares closed sharply lower on Wednesday as investors shunned risky assets on fears of crumbling global growth, weak economic data, and concerns about the political situation in Greece.
European markets
In the UK, the FTSE closed provisionally down 2.8 percent, the French CAC slipped to close around 3.6 percent lower and Germany's DAX was 2.9 percent lower at the close.
Read MoreEuro zone crisis 2.0? Greek stocks tank
Shire falls
Shares extended their slide in afternoon trading after data showed U.S. retail sales declined in September. U.S. stocks recovered after opening sharply lower, with financials leading the decline.
The pan-European Euro Stoxx 600 Index closed over 3 percent lower, with Shire the major laggard, dropping as much as 24 percent. U.S. pharma firm AbbVie announced it is reconsidering a $54 billion takeover of the UK-listed drugmaker due to a change in tax rules in the United States.
Read MoreAbbVie reconsiders $54 billion Shire deal
Meanwhile, chipmaker CSR saw its shares surge 35 percent after Qualcomm announced it was buying the British company in a $2.5 billion deal.
Shares of Balfour Beatty rose as much as 8 percent after the British infrastructure company revealed that Leo Quinn - formerly of QinetiQ, would be the new chief executive. QinetiQ shares dropped 7.8 percent in early deals.
Banks also saw the brunt of the selling, with U.K. listed Barclays down over 4 percent after the EU banking watchdog said nearly all new types of allowance paid to bankers breach its cap on bonuses. Royal Bank of Scotland also closed down over 4 percent.
Greek stocks tank again
In Greece, the Athens Stock Exchange lost as much 9 percent on Wednesday, continuing a major slide in sentiment this week, before paring losses to close over 6 percent lower. Political uncertainty in the country has sparked investor caution over riskier assets. The Prime Minister won a confidence vote last week, which called for lawmakers to back plans to exit an international bailout program early.
Read More Greek PM wins confidence vote in parliament
"A major shift has happened in the last couple of days, Greece, who everyone thought was on the mend, saw its bond yield cross an important line," Kathleen Brooks, a research director at FOREX.com, said in a research note.
"Right now, there is no sovereign crisis, but the fact that Greek yields have crossed the 7 percent threshold is a warning sign that all is not well. Investors are ditching the highest risk peripheral debt and ploughing their money into German yields, 10-year German yields have fallen to another record low on Wednesday, which suggests that stress levels could be starting to rise."
Data released
Data releases on Wednesday included U.K. unemployment numbers. The jobless rate fell to 6.0 percent between June and August, according to the official data, the lowest level since the summer of 2008 and lower than expected. However, the growth in employment was at its slowest in more than a year with 46,000 jobs created.
Read MoreUK unemployment slides, but worries remain
Earlier in the session, German inflation data was confirmed at 0.8 percent (year-on-year) in September.
Obama to speak
In other news, President Barack Obama is scheduled to hold a video conference on Wednesday with British, French, German, and Italian leaders to discuss the Ebola epidemic in West Africa and other pressing international issues.
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