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Europe ends sharply down on geopolitics; oil prices slide

European markets closed sharply lower on Wednesday after geopolitical risks increased uncertainty among investors and the price of Brent crude hit its lowest level in over 11 years.

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The pan-European STOXX 600 finished trade down 1.3 percent provisionally, with all sectors closing sharply lower. London's FTSE was off 1 percent, while France's CAC slipped, closing down 1.3 percent. Germany's DAX ended 0.9 percent lower.

North Korea nuclear test; Saudi tensions

The gloomy start to the European trading day came amid news of a hydrogen bomb test conducted by North Korea overnight, and continued to persist throughout trade.

North Korea announced the test following reports of a 5.1 magnitude earthquake near a nuclear testing site in the politically isolated country. North Korea's state-owned television station later confirmed that the country had conducted a test and said that it won't give up nuclear capability unless U.S. drops its hostile foreign policy towards the country.

News of the test pushed Japanese and South Korean stocks lower in Asia overnight, spurring investors to instead seek safer assets.

Saudi Arabia-Iran row

Investors also watched for developments in relations between Saudi Arabia and Iran, two opposing Middle Eastern powerhouses, following Saudi's execution of a prominent Shiite cleric which prompted protests in Iran.

The row has prompted fears for Syrian peace talks, in which both countries are involved, but on Tuesday Saudi Arabia signaled its soured relations with Iran would not affect talks on Syria, another round of which is scheduled in Geneva this month, Reuters reported.

With all the talk about geopolitical tensions, some defense stocks were trading higher. Britain's BAE Systems finished top of the STOXX 600, up 3.7 percent.

Oil, miners tumble

Meanwhile, oil prices hit their lowest in over 11 years on Wednesday, with Brent crude slipping over 5 percent by Europe's close to $34.57, while U.S. crude was down over a $1 at $34.35. Oversupply concerns added pressure and the Energy Information Administration announced the U.S. had added 10.1 million barrels of gasoline in the previous week.

Stocks in the oil sector were sharply lower, with Tullow Oil ending over 7 percent down. Seadrill, Subsea 7 and Sbm Offshore all closed off more than 3.5 percent.

Metal prices continued to come under pressure amid concerns over the Chinese economy. Mining stocks including BHP Billiton and Rio Tinto both off more than 4.5 percent, dragging down the mining-heavy FTSE 100 index. ArcelorMittal closed down over 6 percent.

Apple report hurts suppliers; Autos sinks

Shares of Apple's European suppliers were sharply lower on Wednesday after a report released on Tuesday suggested that the U.S. technology giant may significantly slash its iPhone 6S and 6S Plus output.

Dialog Semiconductor ended 5.6 percent down, while Austria Microsystems and ARM Holdings also closed sharply lower.

In the U.S., car sales hit a record of 17.47 million vehicles in 2015, but this was not reflected in the share price movement of the auto sector in Europe.

BMW shares fell over 3 percent despite recording an overall rise in U.S. sales for the year. Vehicle sales in just December fell from the same time last year. Meanwhile, Daimler, the owner of Mercedes-Benz, also closed lower despite sales rising year-on-year in December.

Volkswagen shares ended over 2 percent down after seeing another slump in sales in December amid the diesel emissions scandal. Volkswagen's Brand Chief Herbert Diess said on Tuesday the company is confident it will find an "acceptable solution" to bring nearly 500,000 diesel vehicles into compliance with U.S. emissions laws.

On the data front, Markit's euro zone final composite purchasing manager's index (PMI) for December came in at 54.3.

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