Dealers said the recent drift lower extended into Asian trade which then set Europe up for a difficult day after Chinese data showed manufacturing still in negative territory despite a slight improvement.
The surprisingly strong vote for the National Front, at 18 percent, in first-round French presidential polls muddied the waters after incumbent Nicolas Sarkozy was edged out by Socialist Francois Hollande, 29 to 27 percent.
The prospect remains that Hollande will win the May 6 second round but there is much soul searching over what Sunday's vote may mean for future policy.
News that Spain is now officially back in recession stoked fears the eurozone debt crisis is far from over, encouraging investors to caution.
In Paris, the CAC 40 index slumped 2.83 percent to 3,098.37 points as Frankfurt's DAX 30 lost 3.36 percent to 6,523.00 points and London's benchmark FTSE 100 index of top companies shed 1.85 percent at 5,665.57 points.
Other markets were equally badly hit, with Milan slumping 3.83 percent and Madrid down 2.76 percent.
In Amsterdam, stocks lost 2.56 percent after the Dutch coalition government fell when it could not agree on spending plans aimed at stabilising the strained public finances -- a problem which has forced a change in power in many European countries.
In foreign exchange trade, the euro dropped to $1.3133 from $1.3216 in New York late Friday.
The tensions were also reflected on the bond markets, with borrowing costs for most eurozone countries -- bar safehaven Germany -- rising.
On Wall Street, stocks opened weaker and continued that way, with the blue-chip Dow Jones Industrial Average off 1.33 percent, the broad S&P 500-stock index lost 1.20 percent and the tech-rich Nasdaq shed 1.49 percent.
"Economic concerns from around the globe have stoked a bearish mood on Wall Street," said Karee Venema at Schaeffer's Investment Research.
"Two major factors are dragging down the markets ... the (data) for China which is still weak ... and the results of French presidential elections, with a Socialist not necessarily a darling of the financial markets," Gekko Global Markets trader Anita Paluch said.
The HSBC China manufacturing purchasing managers index rose to a two-month high of 49.1 in April from 48.3 in March but was still below the 50 boom-or-bust line.
The move higher "suggests that the earlier easing measures have started to work and hence should ease concerns of a sharp growth slowdown," HSBC chief economist for China Qu Hongbin said.
However, "the pace of both output and demand growth remains at a low level in a historical context and the job market is under pressure. This calls for additional easing measures in the coming months," Qu added.
Eurozone PMI figures meanwhile showed private sector activity sank at the fastest rate in five months in April, indicating the 17-nation bloc faces a longer recession than previously thought.
The composite Purchasing Managers Index compiled by the London-based research firm Markit fell to 47.4 from 49.1 in March.
"The flash PMI signalled a faster rate of economic contraction in the eurozone during April, extending what appears to be a double-dip recession into a third consecutive quarter," Markit chief economist Chris Williamson said.
The data "supports the idea that eurozone economic activity is likely to experience recessionary conditions throughout the course of this year," said Mark Miller, European economist at Capital Economics research firm.
Christian Schulz, senior economist at Berenberg Bank, said the PMI indicates that the eurozone remained in recession in the beginning of the second quarter amid a wave of budget cuts in Europe.
"Tough austerity measures in many Eurozone countries such as Spain and Italy, as well as the prospect of more serious austerity in others such as France and the Netherlands weigh on business sentiment," he said.
In Asian trade earlier Monday, Tokyo gave up early gains to close down 0.20 percent, Hong Kong lost 1.84 percent, Shanghai dropped 0.76 percent and Sydney shed 0.32 percent.