The pan-European STOXX 600 index was down 1.5% by 07:45 GMT, with mining stocks plunging 3.2% on a slide in commodities prices.
Asian equities also skidded following a torrid session for China Evergrande, the world’s most indebted property developer.
The benchmark European STOXX 600 has now fallen for three straight weeks on worries about slowing global growth, soaring inflation, persistently high COVID-19 cases and the spillover from tighter regulation of Chinese firms.
The U.S. Federal Reserve’s policy meeting is in focus on Tuesday and Wednesday, where the central bank is expected to lay the groundwork for a tapering. Overall, 16 central banks are scheduled to hold meetings this week, including in the UK, Norway, Switzerland and Japan.
“To be sure, the (Fed) is set to default to keeping the QE (quantitative easing) spigots open at this week’s (meeting), given the sizable August jobs disappointment alongside a spotting of soft economic indicators,” said Vishnu Varathan, head of economics and strategy at Mizuho.
“But this merely defers taper. By how much is the question.”
German shares tumbled 1.8% to their lowest since late-July as data showed a bigger-than-expected jump in producer prices last month.
In its biggest ever overhaul, the blue-chip German index began trading on Monday with an increase in the number of constituents to 40 from 30.
Europe’s fear gauge jumped to a four-month high.
China-exposed luxury stocks such as LVMH, Kering, Hermes and Richemont fell between 2.5% and 3.7%, extending sharp losses from last week.
Daimler AG shed 2.3% as a report cited the chief of its truck division, the world’s largest, as saying the unit had seen the supply of crucial chips tighten further in recent weeks.
Lufthansa, on the other hand, reversed early declines to jump 3.1% after saying it expects to raise 2.14 billion euros ($2.51 billion) to pay back part of a state bailout that Germany’s top airline received during the coronavirus crisis.
All major European subindexes were lower in morning trading, with healthcare, utilities, food and beverage and real estate posting the smallest declines. The group is perceived to be a safer bet at a time of heightened economic volatility.
For a look at all of today’s economic events, check out our economic calendar.
(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Arun Koyyur)