The bloodletting renewed in European stock markets on Wednesday as investors attempted to weigh the implications of a cocktail of interlinked risks, ranging from an Italian banking system that appears to be falling to its knees, the impact of Brexit, as well as a British commercial property market that is increasingly becoming a concern for investors.

The still ongoing saga surrounding Italian lenders opened a new chapter on Wednesday morning after London's Financial Conduct Authority joined CONSOB in a prohibition of short selling in Monte dei Paschi (BMDPF)  shares, which prompted a minor rebound for the stock but did little to save the rest of the sector from further punishment.

In London, three more property focused investment funds suspended redemptions, bringing the total number to six funds, after increased levels of requests for withdrawals threatened to drive each of them over the edge of a liquidity cliff. Henderson Global, Canada Life and Columbia Threadneedle all joined Aviva (AV) , M&G and Standard Life (SLFPY) on a growing list of funds to have barred the exit doors.

The UK's FTSE 100 index of large cap stocks closed 1.25% lower with financial and real estate companies taking another battering as concerns grew over the potential knock-on effects of a seizure in the commercial property market, much of which has arisen from arising from Britain's vote to leave the European Union.

However, the biggest losers out of the day's price action was retailer Tesco (TSCDY) , whose shares fell more than 8% after it elbowed all others out of the way in order to reach the bottom of the barrel.

The wider grocery sector also sold off sharply as investors questioned whether the beleaguered incumbents will be able to compete on price against Wal-Mart (WMT) - Get Report owned ASDA and German discounters now that the weaker pound is threatening already paltry margins.

The mid-cap FTSE 250 fell by a lesser 0.5% after weakness across the financial and housebuilding sectors was partially offset by a rebound in some mining and technology shares.

In France, the CAC 40 spent much of the day drifting lower, weighed down by companies such as insurance giant Axa (AXAHY) , which fell by 3.9%, and industrial outfit Air Liquide (AIQUY) , whose shares had lost 4.2% by the time that the market closed. 

Germany's Dax index also fell during the session, closing nearly 1.5% lower, with Deutsche Bank (DB) - Get Report and consumer exposed Infineon Technologies (IFNNY) among the biggest losers after dropping 4.2% and 5.2% respectively.

Spain IBEX fell just over 2% over the course of Wednesday, with Brexit-exposed International Consolidated Airlines (ICAGY) , (BABWF) down more than 8% and banks Popular Espanol (BPESF) and Sabadell (BNDSY) both shedding around down 5.2% and 4.4% respectively.