European stocks tumbled late in Wednesday's session to close sharply lower as a sharp drop in oil prices added pressure to equities in all sectors, with banking, commodity and insurance stocks suffering the most.
London's FTSE finished off some 3.5 percent, with the index having entered "bear market" territory during Wednesday's trade after it fell more than 20 percent from its records highs in April.
Once again, miners bore the brunt of the selling with the sector being Europe's worst performer, off 5.4 percent, as Anglo American, BHP Billiton and ArcelorMittal all slid more than 7 percent. This follows gains of as much as 11 percent in the previous session. Glencore was the worst performing miner, ending down almost 10 percent.
Mining and commodity firms have been among the most volatile in markets, as the slide in oil prices and fears around the strength and stability of the Chinese economy have gripped markets.
Banks continued to see downward pressure, with Italian banks weighing down the sector as liquidity concerns surfaced after Italy's Banca Monte dei Paschi de Siena (BMPS) said some customers had been pulling savings out, according to Reuters. BMPS slumped over 22 percent by the close, with Banco Popolare and Unicredit ending sharply down 10.9 and 7.8 percent respectively.
The sharp losses in the banking sector come on the eve of the European Central Bank's policy meeting this Thursday, where analysts expect no major policy changes.
Asian stocks slid Wednesday, with major indexes declining by more than 1 percent each, as global sentiment remained low on concerns over economic growth, China and low oil prices. Japanese stocks took the brunt of the selling, with the Nikkei falling close to 4 percent, entering bear market territory as it has fallen more than 20 percent from its peak in June last year.
Crude futures crumbled during Wednesday's trade, with U.S. crude falling to its lowest since 2003 hovering around $27 a barrel as bearish financial news sparked deeper worries over demand and a global supply glut. This follows the IEA's warning on Tuesday which said oil markets could "drown in oversupply".
U.S. crude last stood over 5 percent down at $26.90 while Brent hovered around $27.54 per barrel. Oil stocks tumbled on the back of this, with Seadrill tanking 29 percent, and Tullow Oil off over 7 percent.
Royal Dutch Shell said its profit fell by as much as 50 percent in the last quarter of last year, compared to the same time in 2014 as a result of the collapse in oil prices. Shares in the oil major fell 7 percent.
Overnight, the International Monetary Fund (IMF) cut its global growth forecast for 2016 to 3.4 percent, from 3.6 percent. The organization cited slower growth in emerging markets, especially in China, falling commodity prices, and rising interest rates in the U.S. as potential risks to global growth.
On top of this, the MSCI All-Country World Index, which measures all major developed and emerging markets, fell into a bear market Wednesday, with its decline from early last year now totaling more than 20 percent.
Out of the dozen stocks closing in positive territory, U.K. retailer WH Smith was the STOXX 600's top performer, ending up 5.8 percent, after the company said it expected its full-year profit to be slightly above expectations, following a positive Christmas sales season.
Spot gold prices ticked higher on Wednesday which gave a boost to Randgold, with shares ending up 3.5 percent.
Swiss insurer Zurich saw its shares tank almost 11 percent after the firm issued a profit warning as it anticipates its general insurance business to post an operating loss of around $100 million for the fourth quarter of 2015, mainly due to catastrophe claims. The news dragged down other insurance players, including Prudential, off over 5 percent.