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Invincible and Inflexible engaged Scharnhorst and Gneisenau, while Sturdee detached his cruisers to chase Leipzig and Nürnberg.
Inflexible and Invincible turned to fire broadsides at the armoured cruisers and Spee responded by trying to close the range. His flagship Scharnhorst took extensive damage with funnels flattened, fires and a list. The list became worse at 16:04, and she sank by 16:17. Gneisenau continued to fire and evade until 17:15, by which time her ammunition had been exhausted, and her crew allowed her to sink at 18:02. During her death throes, Admiral Sturdee continued to engage Gneisenau with his two battlecruisers and the cruiser Carnarvon, rather than detaching one of the battlecruisers to hunt down the escaping Dresden. 190 of Gneisenau's crew were rescued from the water. Both of the British battlecruisers had received about 40 hits between them from the German ships, with one crewman killed and four injured.
Meanwhile, Nürnberg and Leipzig had run from the British cruisers. Nürnberg was running at full speed but in need of maintenance, while the crew of the pursuing Kent were pushing her boilers and engines to the limit. Nürnberg finally turned for battle at 17:30. Kent had the advantage in shell weight and armour. Nürnberg suffered two boiler explosions around 18:30, giving the advantage in speed and manoeuvrability to Kent. The German ship then rolled over and sank at 19:27 after a long chase. The cruisers Glasgow and Cornwall had chased down Leipzig; Glasgow closed to finish Leipzig, which had run out of ammunition but was still flying her battle ensign. Leipzig fired two flares, so Glasgow ceased fire. At 21:23, more than 80 mi (70 nmi; 130 km) southeast of the Falklands, she also rolled over and sank, leaving only 18 survivors. Casualties and damage were extremely disproportionate; the British suffered only very lightly. Admiral Spee and his two sons were among the German dead. Rescued German survivors, 215 total, became prisoners on the British ships. Most were from the Gneisenau, nine were from Nürnberg and 18 were from Leipzig. Scharnhorst was lost with all hands. One of Gneisenau's officers who lived had been the sole survivor on three different guns on the battered cruiser. He was pulled from the water saying he was a first cousin of the British commander (Stoddart).
Of the known German force of eight ships, two escaped: the auxiliary Seydlitz and the light cruiser Dresden, which roamed at large for a further three months before her captain was cornered by a British squadron (Kent, Glasgow and Orama) off the Juan Fernández Islands on 14 March 1915. After fighting a short battle, Dresden's captain evacuated his ship and scuttled her by detonating the main ammunition magazine.
As a consequence of the battle, the German East Asia Squadron, Germany's only permanent overseas naval formation, effectively ceased to exist. Commerce raiding on the high seas by regular warships of the Kaiserliche Marine was brought to an end. However, Germany put several armed merchant vessels into service as commerce raiders until the end of the war (for example, see Felix von Luckner).
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