European stock markets have fallen once again today, as traders reacted to China's economic problems, the outlook for US interest rates, Greek action over its bailout, as well as sliding oil prices.

Greek stocks sank despite Athens paying back a chunk of its latest bailout, as concerns elsewhere dragged down global markets.

London's benchmark FTSE 100 index dropped 0.49% to stand at 6,371 points in midday deals, while in the eurozone Frankfurt's DAX 30 shed 1.17% and the CAC 40 in Paris lost 1.14% so far today.

"The European stock markets are continuing to lose ground as investor worries over China intensify," said Fawad Razaqzada, analyst at Gain Capital trading group.

"Such is the level of pessimism that the DAX has even taken out the low it hit in July when the Greek crisis ... was at the forefront," he added.

Greece today cleared €3.4bn owed to the European Central Bank, effectively ending the bitter feud dividing the leftist-governed eurozone nation and its European creditors that threatened to force the country out of the euro and sow chaos in the global economy.

But Athens' main stocks index was down 2.95% afterwards, with deepening political rifts in Greece putting pressure on Prime Minister Alexis Tsipras to call snap elections.

"The Eurozone indices fared a bit worse than the FTSE ... despite the fact that Greece paid back the ECB on time, an event that would have once caused indices-wide jubilation," said Connor Campbell, analyst at Spreadex trading group.

Meanwhile, Asian markets provided a negative lead, slumping on heightened concerns about the health of China's economy after Federal Reserve minutes from its last policy meeting clouded the outlook for US interest rates.

China's benchmark Shanghai stock index closed down 3.42% overnight, as worries persisted over the country's weak economy and currency.

On currency markets, the dollar had tumbled yesterday as the Fed dampened expectations for a rate rise in September and outlined its fears about the global economy, sending oil prices tumbling.

The minutes "did not shed much more in the way of solid news on the timing of the first rate hike, which now might be complicated by Chinese developments and increasing market volatility", said Neil MacKinnon, economist at VTB Capital.

Dealers said markets remained pressured by uncertainties over China after the shock devaluation of the yuan last week added to fears that growth in the world's second biggest economy is slowing more than thought.