German's DAX fell to close around 1.5 percent lower, the French CAC slipped 1.1 percent, while London's FTSE finished 0.5 percent lower.
Greek stocks ended around 3.5 percent lower, with banking stocks one of the major underperformers after Greece's election result on Sunday. Investors deemed a Greek exit from the euro zone unlikely despite anti-austerity party Syriza's victory this weekend, but lenders from Italy, Portugal, Spain and Greece showed some major losses proving concerns are still present.
Bank of Piraeus lost 12 percent, Alpha Bank was down 11 percent and the National Bank of Greece fell 11 percent. Uncredit shares were lower by 2 percent with Banca Popolare di Sondrio losing around 2.5 percent.
In earnings news, Dutch technology group Philips highlighted mores costs for 2015 and cut its earnings target on Tuesday; shares fell over 5 percent in early deals.
Hunting, a British-based supplier to the oil and gas industry, saw shares slide 6.5 percent after a downgrade, with analysts also hitting the shares of Royal Mail and Dixons Carphone.
Meanwhile, shares of German engineering group Siemens lost 3 percent after it reported falling profits and a reshuffling of its management board.
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In the U.S. weak fourth-quarter corporate earnings, largely due to currency headwinds, sent Dow futures 300 points lower before dropping sharply at the open. Orders for U.S. business equipment also unexpectedly declined in December.
Caterpillar fell after the Dow component and maker of mining and construction equipment reported a lower profit short of estimates.
Orders for business equipment fell 3.4 percent last month, illustrating the impact of the slowing global economy on U.S. multinationals.