By Jonathan Davies

Financial markets in Europe have been hit again by fears over the state of China's economy.

The main markets in Germany, France and the UK all fell by 2% or more as figures showed China's factory activity contracted in July.

The manufacturing purchasing managers' index (PMI) fell to 49.7, with any figure above 50 indicating growth. The sector contracted at its fastest pace for three years.

It comes after a string of economic data caused huge tension in global markets last week. Shares in China fell by 9% over the week after recovering slightly on Friday.