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European Markets Close Lower as Tech Stocks Fall Sharply; Stoxx 600 Down 2%

Michele Tantussi | Getty Images News | Getty Images
  • Stocks in Asia-Pacific mostly declined overnight, as various firms downgraded China's GDP forecasts amid a power crunch.
  • U.S. stocks fell following a rise in bond yields that pressured growth pockets in the market, a trend which weighed heavily on European tech stocks.
  • European traders also continued to digest the fallout of the German election on Tuesday after the vote on Sunday resulted in more uncertainty for the country.

LONDON — European stocks closed sharply lower on Tuesday as global investors monitored a spike in U.S. bond yields and Chinese growth concerns.

The pan-European Stoxx 600 closed down by around 2% provisionally, with tech stocks dropping 4.4% to lead the losses.

Stocks in Asia-Pacific mostly declined overnight, as various firms downgraded China's GDP forecasts amid a power crunch. Goldman Sachs on Tuesday slashed its China GDP growth expectations to 7.8%, down from the 8.2% previously forecast. Nomura also expected China's GDP to grow by 7.7% this year, down from a previous forecast of 8.2%.

Meanwhile, U.S. stocks fell Tuesday following a rise in bond yields that pressured growth pockets in the market, a trend which weighed heavily on European tech stocks.

European markets also continued to digest the fallout of the German election on Tuesday after the vote on Sunday resulted in more uncertainty for the country.

The center-left Social Democratic Party (SPD) gained the largest share of the vote with 25.7% by a slim margin, with Angela Merkel's right-leaning bloc of the Christian Democratic Union and Christian Social Union gaining 24.1% of the vote. 

Coalition negotiations between the main parties and two smaller counterparts, the Greens and Free Democrats, are likely to take weeks or even months. The SPD has previously rejected the option of forming another "grand coalition" with the CDU-CSU. Both parties have claimed a mandate to govern after the result.

On the data front, German consumer morale for October has brightened unexpectedly, according to the GfK institute's consumer sentiment index, published Tuesday. The survey of around 2,000 Germans climbed to 0.3 points from a revised -1.1 points for September, outstripping a Reuters forecast for -1.6.

Elsewhere, European Central Bank President Christine Lagarde warned against overreacting to rising inflation, reiterating her position that any spike in prices was likely to be temporary.

In corporate news, British software company Blue Prism agreed a £1.1 billion ($1.5 billion) deal to be taken over by private equity firm Visa Equity Partners. Shares of Blue Prism sank around 4% on the news.

In terms of individual share price movement, Italian systems integration company Reply tumbled 9.6% while Finnish software firm QT Group fell 10.9%.

British engineering company Smiths Group was among the top performing European stocks Tuesday, climbing 3.4% after the company agreed to sell its medical devices unit and declaring a dividend of 26 pence following strong earnings.

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- CNBC's Ryan Browne, Eustance Huang and Maggie Fitzgerald contributed reporting to this story.

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