European shares fell sharply on Thursday after China accelerated the depreciation of the yuan, sending currencies across the region reeling and domestic stock markets tumbling.
The pan-European FTSEurofirst 300 index and the euro zone's blue-chip Euro STOXX index both fell 2 percent. Germany's DAX declined 1.4 percent, while Britain's FTSE 100 weakened by 1.6 percent.
The People's Bank of China (PBOC) again surprised markets by setting the official midpoint rate on the yuan, also known as the renminbi, at 6.5646 per dollar, the lowest since March 2011.
That was 0.5 percent weaker than the day before and the biggest daily drop since last August, when a near 2 percent devaluation of the currency roiled markets.
Regional currencies promptly went into a tailspin. The Australian dollar, often used by foreign exchange dealers as a liquid proxy for the yuan, fell half a U.S. cent in a blink.
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Stock markets in China, which is the world's second-biggest economy and the leading global consumer of metals, were suspended for the rest of the day less than half an hour after opening as a new circuit-breaking mechanism was tripped for the second time this week.
Shanghai stocks slid 7.3 percent to trigger the halt in trading, a repeat performance of Monday's sudden tumble. Japan's Nikkei ended down 2.3 percent in sympathy, and Hong Kong's Hang Seng Index shed 3.1 percent.
Investors have expressed fears that the yuan's rapid depreciation could mean China's economy is even weaker than had been imagined.
"The extent of the slowdown in China is certainly a worry. Investor sentiment is very fragile at the moment," said Terry Torrison, managing director at Monaco-based McLaren Securities.