European stocks fell to a three-month low Thursday after disappointing China trade data and continued speculation over Britain's fate weighed on risk appetite.

Britain's FTSE 100 declined by 0.66% by mid-day in London trading, a move that briefly took the benchmark under the 7,000 level for the first time since Oct. 3 before paring losses to 7,024.01. Major indices in Germany, France and Italy were also quoted with similar opening declines after a weak Asia trading session during which investors were unsettled by weaker-than-expected September export figures from China and unusual volatility in U.S. Treasury bonds. The broadest measure of European equities, the Stoxx 600 index, fell 1.15% to a three-month low of 334.72 before finding bids to lift it past 335 by mid-day.

Basic resource stocks were notably lower, led by mining giants BHP Billiton (BLT) and Rio Tinto (RIO) - Get Report  , both of which fell hard on the back of weak trade data in China, dropping ed the index to the downside in the first hour of trading, falling by around 3.8% and 4.1% respectively. 

Authorities in China said Thursday that the country's September surplus fall to a six-month low after a worrying 10% plunge in exports. Imports fell 1.9%, compared with the 0.6% growth expected, giving no reassurance that domestic consumption is picking up the slack created by weaker global demand. In August imports had risen for the first time in almost two years. The dollar-denominated trade surplus narrowed to just under $42 billion from $52 billion.

Two further initial movers in the U.K. market were Tesco, (TSCO) - Get Report the country's biggest supermarket chain and brand giant Unilever, the latter of which posted stronger-than-expected third quarter sales Thursday but remains locked in a potentially damaging spat with Tesco and other major grocery store chains over price increases, which the company says is the natural result of the 20% decline in sterling over the past four months.

Tesco shares were 2.2% lower in London dealing to change hands at 196.55 pence per share, following reports it would pull certain Unilever-supplied brands, including the iconic Marmite savoury spread, in the face of sharp increases in prices. Unilever shares were also lower, falling 2.4% to 3,613.5 pence per share despite reporting life-for-like third-quarter sales growth of 3.2% and affirming full-year revenue targets. 

Market risk sentiment was further impacted by yet another downward gap on sterling, which fell by around 0.2% against the U.S. dollar from Wednesday close to trade at 1.2160.

U.K. Gilt yields, however, fell from three-months low to trade at around 1.03% at the open as investors moved cash into safer assets amid a broader rally in fixed income markets around the world. Benchmark 10-year German Bunds also saw yields fall to around 0.39%.