London's benchmark FTSE 100 index dropped 0.76 percent to 6,613.86 points compared with Tuesday's close.
Frankfurt's DAX 30 slid 1.26 percent to 11,151.72 points and the CAC 40 in Paris shed 0.93 percent to open at 5,051.49.
Asian shares fell on Wednesday after China cut the yuan's value against the dollar for a second day, fuelling concern about the world's number two economy and driving expectations that the currency could fall further.
Beijing's surprise devaluation of the yuan by 1.86 percent on Tuesday had already sent ripples through global financial markets, prompting a wave of selling in equities and commodities and hitting Asia-Pacific currencies.
On Wednesday, the People's Bank of China again reduced the value of the yuan against the greenback, trimming the reference rate by 1.62 percent.
At the same time, three key indicators released by China all came in below market expectations.
Industrial production -- which measures output at factories, workshops and mines in the country -- rose 6.0 percent year-on-year in July, the National Bureau of Statistics (NBS) said.
But it slowed from a 6.8 percent increase in June and was far below the median forecast for a 6.6 percent rise from 40 economists surveyed by Bloomberg News, undershooting even the most bearish of their estimates.
Retail sales, a key indicator of consumer spending, meanwhile rose 10.5 percent in July from a year earlier, the NBS said, just below a 10.6 percent forecast in the poll.
And fixed asset investment, a measure of government spending on infrastructure, expanded 11.2 percent year-on-year in the January-July period -- also below an 11.5 percent median estimate, and the lowest since December 2000.