European equities traded sharply lower on Wednesday as a yuan-related selloff in Asian stocks weighed on investor sentiment.
The pan-European Stoxx 600 provisionally closed 2.7 percent lower, extending losses throughout the afternoon.
U.S. stocks quickly fell more than 1 percent on Wednesday as a second day of decline in the yuan against the dollar increased concerns about global growth. The Dow Jones industrial average quickly fell 150 points in the open, extending Tuesday's 212-point loss.
Set prior to the market open, the midpoint, or guidance, rate — on Wednesday was adjusted to the weakest level for the currency since October 2012 — sending shockwaves through foreign exchange markets.
The Stoxx 600 auto sector took a beating, falling over 4 percent. German tire maker Continental ended down around 4.5 percent. BMW, Daimler, and Volkswagen were all trading sharply lower after the yuan devaluation continued to raise concerns about the health of the world's second-largest economy.
In European news, Credit Suisse Group was in talks to settle allegations related to its Crossfinder "dark pool" trading venue, which could result in a fine running in the high tens of millions of dollars, the Wall Street Journal reported, citing people familiar with the matter. Shares in the company were down over 4.5 percent.
German consumer goods group Henkel reported a 14 percent second quarter rise in core profit. German utility E.ON reported first-half earnings fell 13 percent as its gas- and coal-fired plants, assets it plans to spin off next year, continue to struggle. Shares in the firm plunged close to 9 percent to the bottom of the DAX.
The basic resource sector, which contains many of the miners, also took a hammering on Wednesday. London-listed Glencore was down over 6 percent while Luxembourg-based steelmaker Arcelormittal and Rio Tinto were also in negative territory. Precious metal miners rose to the top of the FTSE, with Randgold Resources climbing 5 percent as gold gained on China fears.
Elsewhere, the fragile ceasefire between Ukraine and Russia looked increasingly shaky after Ukraine on Monday accused rebels of carrying out the heaviest artillery attacks since a truce was agreed, while Russia blamed Kiev, Reuters reported.
The European Union, which oversaw the drawing up of the ceasefire and imposed sanctions on Russia for its role in the conflict,said the fresh escalation of the conflict in eastern Ukraine violated the spirit and the letter of the ceasefire.
In other news, Moody's Investors Service cut Brazil's credit rating to near-junk status on Tuesday but said the country's investment grade status was safe for now.
In the U.K., official figures showed that unemployment remained steady at 5.6 percent in the second quarter of the year, but wage growth fell to hit its in three months in June. Sterling dropped sharply against the euro, before paring losses.