The DAX ( ) in Frankfurt slumped 2.9%, the CAC 40 ( ) in Paris fell 2.1% and London's FTSE 100 ( ) slid 2.1%.
The selling also hit Asian markets, with the Hang Seng () in Hong Kong down 4.8% and Japan's Nikkei ( ) falling 1%.
In Europe, bank shares were among the hardest hit amid speculation that Dexia Group could be broken up. Shares of the Franco-Belgian bank were down 24%.
Credit Agricole, Societe Generale, Royal Bank of Scotland () and Barclays all fell sharply, with insurance companies Lloyd's and AXA also under pressure.
The selling came as investors continue to grapple with the threat of a default by Greece. Eurozone finance officials met Monday in Luxembourg to discuss the nation's progress on fiscal reforms. Read More