European shares slipped and the euro touched a 23-month low on Wednesday as investors worried that Spain's banking problems would push its borrowing costs to unsustainable levels and after China signaled it is not planning a large stimulus package.

The ongoing debt crisis in the euro zone and concerns it could hurt fragile global growth have kept many investors in riskier assets like equities and commodities on the sidelines this week so prices have traded in narrow ranges.

The FTSE Eurofirst index of top European shares reversed much of Tuesday's gains opening down 0.4% at 987.47 points.

The single currency dipped 0.3% to $1.2455, its weakest rate since July 2010.

"It's as if everything starts and ends with Spain. Everyone is talking about Spain, putting Greece's problems on the back burner," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

The euro's plight underpinned the dollar index, measured against a basket of major currencies, which rose above 82.66 to its highest since September 2010, dragging down dollar-sensitive commodities.

Indications that China may take a cautious approach to stimulating its economy as growth weakens undermined sentiment in Asian markets, helping send the MSCI world equity index down 0.5% 302.31.

European markets will be focused on Italy's sale of up to 6.25 billion euros of five- and 10-year bonds later where the government's borrowing costs are set to rise but with domestic investors expected to ensure sufficient demand.