Stock markets have fallen sharply amid fears of a further deterioration in US-Chinese trade relations.
Tensions in Germany’s coalition government over migration policy added to investors’ uncertainty.
The main indexes in Paris, Frankfurt and Madrid were all more than 1% lower in afternoon trading, while London’s FTSE 100 was less badly affected, dropping 0.3%.
On Wall Street, the Dow Jones fell 0.9%, while the S&P 500 was 0.6% lower.
Earlier on Monday, markets in Asia fell following US President Donald Trump’s decision on Friday to impose 25% tariffs on $50bn worth of Chinese goods.
China retaliated, saying it would impose an additional 25% tariff on 659 US goods worth $50bn.
Japan’s Nikkei closed 0.8% lower on Monday, while South Korean shares fell 1.1% and other Asian markets also declined.
However, stock markets in China and Hong Kong were closed for a public holiday.
“Tensions between the US and China are escalating, and we are not any closer to an agreement being reached. With neither side willing to back down, investors are caught in the middle,” said David Madden, market analyst at CMC Markets.
European investors are also wary of political factors in Germany, where Chancellor Angela Merkel has clashed with leaders of her coalition ally in Bavaria, the CSU, over her refugee policy.
“With the US-China trade war already creating an uncomfortable trading atmosphere, the brewing political tension between long-time allies the CDU and CSU in Germany has caused some bloody losses in the eurozone,” said Connor Campbell, financial analyst at SpreadEx.
Sterling continued to struggle, trading against the dollar at $1.3241 – close to the seven-month low of $1.3205 hit late last month.
The pound has fallen 8% since mid-April as traders become less confident that the Bank of England will follow the US Federal Reserve by raising interest rates in August.