* DAX drops, index some 20 pct below 2015 record high
* China worries intensify, miners and car stocks hit hard
* China accelerates devaluation of yuan
By Sudip Kar-Gupta
LONDON, Jan 7 (Reuters) - European shares fell sharply on Thursday after China accelerated the depreciation of the yuan, sending currencies across the region reeling and domestic stock markets tumbling.
The pan-European FTSEurofirst 300 index and the euro zone's blue-chip Euro STOXX index fell 2.3 percent and 2.5 percent respectively.
Germany's DAX dropped 3 percent, while Britain's FTSE 100 weakened by 2.3 percent.
The DAX and FTSEurofirst were both at their lowest level since early October, with the DAX some 20 percent below a record high reached in April 2015.
"It's looking pretty ugly. We've been scaling down equity positions. It's time to take a step back to re-evaluate the situation," said Andreas Clenow, hedge fund manager and chief investment officer at ACIES Asset Management.
The People's Bank of China (PBOC) again surprised markets by setting the official midpoint rate on the yuan, also known as the renminbi (RMB), at 6.5646 per dollar, the lowest since March 2011.
Stock markets in China, which is the world's second-biggest economy, were suspended for the rest of the day less than half an hour after opening as a new circuit-breaking mechanism was tripped for the second time this week.
Investors have expressed fears that the yuan's rapid depreciation could mean China's economy is even weaker than had been imagined.
The worries over China hit mining stocks particularly hard, since China is the leading global consumer of metals, with Anglo American slumping 8 percent while Glencore fell 5.6 percent.
Companies that export to China, such as carmakers, also fell sharply, with BMW down 4.9 percent.
"The extent of the slowdown in China is certainly a worry. Investor sentiment is very fragile at the moment," said Terry Torrison, managing director at Monaco-based McLaren Securities.
Today's European research round-up