European stocks fell on Wednesday due to concerns over the growth outlook for China and the eurozone, and after official data showed the British economy shrank more than previously thought.
London's FTSE 100 index of top shares slid 0.28 per cent to 5,852.84 points in morning deals and Frankfurt's DAX 30 shed 0.40 per cent to 7,050.87 points.
In Paris, the CAC 40 fell 0.38 per cent to 3456.55 points and Madrid's Ibex 35 lost 0.31 per cent to 8114.6 points.
The European single currency firmed to $1.3340 from $1.3315 in New York late on Tuesday. Bond yields in Spain and Portugal were meanwhile at elevated levels on eurozone debt crisis fears, traders said.
Asian markets mostly weakened on Wednesday after overnight falls on Wall Street and as lingering concerns over China's slowing economy continued to play on investor confidence.
"Last night's late sell-off on Wall Street and renewed concern over the outlook for China has combined to make for a soft start to the day's trade in London," said analyst Mike McCudden at online brokerage Interactive Investor.
"Markets are anticipating slowing growth in China ... and expect more in the way of eurozone fireworks from Portugal and Spain."
London sentiment was also dented after official data showed that British gross domestic product shrank by 0.3 per cent in the fourth quarter of last year, or three months to December 31.
That was worse than the previous estimate for a 0.2-per cent contraction, the Office for National Statistics said in a statement, citing poor performances from the services sector and household spending.
A further contraction in the first quarter of 2012 would place Britain back in recession, defined as two successive negative quarters. First-quarter data is scheduled for release in April.
"After a very quiet open for markets, the FTSE is slipping lower, as a weaker UK GDP reading begins to take effect," said IG Index trader Yusuf Heusen.
The insurance sector was hit after Lloyd's of London posted its second-biggest loss on record, blaming major natural catastrophes including Japan's earthquake disaster and floods in Thailand.
Lloyd's, which is an insurance market, said it made a pre-tax annual loss of STG516 million ($A791.11 million) in 2011 on soaring claims. That compared with a profit of STG2.195 billion ($A3.37 billion) in 2010.
"Lloyds of London reported the costliest-ever year in their 324-year history for catastrophe claims after earthquakes in Japan and New Zealand, tornadoes in the United States and flooding in Thailand and Australia," said CMC Markets dealer Vaughn Affonso.
In reaction, British insurers Prudential and RSA saw their share prices tumble by 3.07 per cent and 6.04 per cent respectively, to stand at 773 pence and 108.8 pence.
Global stock markets are retreating slightly after surging in the first few months of 2012 thanks to improving confidence in the US economy and easing tensions over Europe's debt crisis.