Europe's top equities benchmark sank 2.2% on Monday amid worries about a potential conflict in Ukraine as well as a Federal Reserve meeting later this week that could signal the removal of its vast stimulus programme.
The Europe-wide STOXX 600 index was set for its worst daily performance since Nov. 26.
The United States said on Sunday it was ordering diplomats' family members to leave Ukraine, in one of the clearest signs yet that American officials are bracing for an aggressive Russian move in the region.
"The events on the border between Ukraine and Russia are certainly compounding the anxiety in the markets at the moment," Craig Erlam, senior market analyst at OANDA, said.
"It seems that everywhere we look at the moment, there's mounting risks for investors and it's taking a heavy toll on risk assets."
European equities slump; oil dips
Europe's travel & leisure stocks took the hardest hit, down 4.0%, while rate-sensitive technology stocks fell 3.8%, hitting their lowest level in more than six months.
The keenly awaited Fed meeting concludes on Wednesday. While policymakers may not raise interest rates until March, tougher language about inflation is already kicking in.
"For several years, the markets have become accustomed to buying the dips no matter what's the fundamental backdrop. However, recent events appear to be seeing a significant loss of confidence in this mindset," Michael Hewson, chief market analyst at CMC Markets, said.
Shares of Netflix slumped almost 22% following a gloomy forecast on Friday, setting a weak tone ahead of earnings from Apple, Microsoft and other tech giants this week.
Meanwhile, IHS Markit's flash reading showed the euro zone economic recovery weakened further in January as renewed restrictions imposed to contain the Omicron coronavirus variant put another dent in the bloc's dominant services activity.
Helping limit the decline in UK's blue-chip FTSE 100 , Unilever climbed 6.1% after reports that Trian Partners, Nelson Peltz's activist hedge fund, had built a stake in the consumer goods company.
Meanwhile, the telecom sector got a boost from a 6% jump in Vodafone after Reuters reported the company and Iliad were in talks to strike a deal in Italy that would combine their respective businesses.
British banknote printer De La Rue slumped 23.3% after it said its turnaround plan would be delayed by a year, while warning of annual profit falling short of market expectations.
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