The benchmark DAX index at the Frankfurt Stock Exchange lost nearly 400 points on Tuesday and closed at 9,570.66 points.
German carmaker Volkswagen is trapped in the emission manipulation scandal and its share price continued to fall sharply. The DAX index slid and lost 377.85 points (3.8 percent), Xinhua news agency reported.
All the 30 DAX member shares declined with Volkswagen AG taking the lead with a decrease of 19.82 percent. It lost nearly 20 percent on Monday.
K+S Aktiengesellschaft, a supplier of standard and speciality fertilizers, fell by 8.29 percent.
Two other carmakers Daimler AG and BMW AG St also suffered losses, down by 7.02 percent and 6.02 percent.
The turnover stood at 6.84 billion euros (around $7.71 billion). VW was the most traded share of the day with a turnover of 1.59 billion euros (around $1.79 bn).
