Europe's leading stock markets fell sharply on Wednesday, closing more than two percent lower in tense trading as investors nervously awaited key US economic data due on Thursday, analysts said.

London's FTSE 100 index of leading shares fell 2.32 percent to 5080.42 points. In Paris the CAC 40 index fell 2.14 percent to 3663.78 points and Frankfurt's DAX closed 2.46 percent lower at 5496.27.

Analysts pointed to uncertainty over recent economic signs from the United States, which on Thursday was to publish key third-quarter growth data.

"We have a crucial US GDP figure out tomorrow, which gives an opportunity to settle some investor nerves," said Joshua Raymond at City Index. "But if it disappoints, the market reaction could be quick and severe."

US stocks also fell on Wednesday amid concerns over the pace of economic recovery following an unexpected decline in new home sales and dampening consumer sentiment.

The Dow Jones Industrial Average was down 0.37 percent to 9845.74 in early trading. The tech-heavy Nasdaq shed 1.41 percent to 2086.29 and the broad-market Standard & Poor's 500 index retreated 0.96 percent to 1053.21.

"Fears that the continuation of the economic recovery may be stalling are dampening sentiment on Wall Street, exacerbated by an unexpected drop in new home sales and steep losses in Asia," said analysts at Charles Schwab & Co.

"The undoubted culprit is the drift in US consumer confidence in the United States on Tuesday," said MF Global analyst Manus Cranny.

"The reality is we still have a hangover and that just adds to a lack of conviction as we wait for third-quarter US GDP and nervousness about non-farm payrolls (jobs data) next week."

On Tuesday, the Conference Board, a private research firm, said consumer confidence fell sharply in October amid growing worries about unemployment, raising concerns of a slow recovery in the world's biggest economy.

VTB Capital's Neil MacKinnon called this "a worrying development."

"The drop in consumer confidence immediately raises the question as to whether the US economy will suffer a relapse leading to 'double-dips' and 'W-shaped' recoveries," he said.

Asian shares fell for a second successive day on Wednesday as general weakness on Wall Street pushed investors towards further selling. There were heavy losses in Shanghai, Sydney and Hong Kong.

In London Anthony Grech, analyst at IG Index, cited plunging shares in banks and mining firms. Mining group Xstrata shed 9.40 percent and Lloyds Banking Group fell 4.5 percent.

Elsewhere in Europe, Amsterdam's AEX index fell 2.52 percent to 303.29 points, the Swiss Market Index 1.38 percent to 6279.94, the Bel-20 in Brussels 2.91 percent to 2371.96 and Madrid's Ibex-35 1.76 percent to 11 429.80.

Milan's FTSE Mib also closed lower, down 2.25 percent at 22 315 points.

"There are more and more shades of grey on this road to recovery than many had expected," Grech said in a note.