The pan-European Stoxx 600 tumbled 1.12 percent to 37.221 by the close, with all sectors in the region failing to post gains by the end of trade.
On the bourses front, the FTSE 100 slipped 1.16 percent, while the French CAC 40 fell 1.10 percent and the German DAX dropped 1.36 percent. All major markets in peripheral Europe closed in the red.
Europe's banking index was among the worst sectoral performers, finishing down 1.37 percent amid renewed fears over Italy's budget plans. The FTSE MIB index slipped 2.43 percent by the market close, with government bond yields hitting fresh highs during trade.