LONDON: European equities slipped to a three-week low on Wednesday, hit by weakness in the commodity sector as concerns over the Chinese economy resurfaced after it allowed the yuan to weaken further and poor services sector data was reported.
The FTSEurofirst 300 index of top European shares closed 1.3 percent lower at 1,392.40 points after falling to 1,382.96, the lowest level since mid-December.
Declines were broad based, with all STOXX 600 sectors trading in negative territory. However, basic resources stocks, including miners, down 3.3 percent, were the biggest sectoral faller.
Shares in Anglo American, BHP Billiton, Glencore and Rio Tinto fell 2.7 to 4.9 percent.
Miners came under pressure after the People's Bank of China set a weaker midpoint for the yuan, prompting concerns that the economy of the world's largest metals consumer could be in worse shape than previously believed.
A survey showed that China's services sector expanded at its slowest pace in 17 months in December, following on from weak factory data on Monday which also knocked markets globally.
"Weakness in China's economy isn't new ... but China's reaction function seems limited at this stage. They have to focus on weakening the currency, rather than adopting the massive stimulus that some might hope and pray for," said Ioan Smith, managing director of KCG Europe.
"We may see subdued commodity prices and therefore continued weakness in the commodity-related names."
European energy stocks also fell 2 percent after oil prices slid more than 4 percent to new 11-year lows as the row between Saudi Arabia and Iran made any cooperation between major exporters to cut output even more unlikely.
Risk appetite was also dampened after North Korea said it had successfully conducted a test of a nuclear device on Wednesday morning, marking a significant advance in the isolated state's strike capabilities and raising alarm in Japan and South Korea.
In the technology sector, chipmakers fell after a report that Apple was expected to cut production of some iPhone models this quarter.
Infineon fell 3.1 percent, also suffering from a downgrade to "market perform" from "outperform" by brokerage Bernstein. Dialog Semiconductor fell 5.6 percent, ASML fell 2.3 percent and ARM was down 3 percent.
French advertisers were also under pressure, with Publicis and JCDecaux down more than 4 percent after downgrades by Exane BNP Paribas and Morgan Stanley respectively.
"JCDecaux shares have shrugged off negative EPS revisions in 2015, rerating to record highs," analysts at Morgan Stanley said in a note.
"The bull case on JCDecaux relies notably on outdoor ad spending gaining share in an ever fragmenting media landscape world. Yet, the share of outdoor has been stable for 10 years and media buyers do not expect it to expand further."
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