European shares declined for a third straight session on Monday, with banks again topping the losers' list as Citigroup's warning of loan losses sparked fresh worries over the impact of credit market woes.
UBS, HSBC and Royal Bank of Scotland were among the biggest weighted losers in Europe, down between 1.6 and 3.7 percent.
Miners Rio Tinto and BHP Billiton also fell, hit by weakness in copper prices.
The pan-European FTSEurofirst 300 index lost 0.7 percent to end at 1,549.2, its lowest closing level since Oct. 22. The index is down 3 percent over the past three sessions.
"The ink is still wet on Citigroup detailing its losses and people are still fairly uncertain if banks have more skeletons in the closet," said one trader. "There is a crisis of confidence in the market."
The FTSEurofirst 300 index is still up 4 percent so far this year but well short of the 14 percent gain made by this time last year.
U.S. stocks were lower on Monday, led by financial services companies, but markets cut losses after data showed stronger-than-expected growth in the vast services sector.
In Europe, the DJ Stoxx banking sector index lost 1.6 percent after earlier falling as much as 2.6 percent to its lowest level since July 2006. The index is down 13 percent this year, suffering the biggest fall of the 18 groups in the DJ Stoxx 600 index.
More Bad News?
"Things could get worse in our view," Jonathan Pierce, analyst at Credit Suisse, said of UK banks. "It seems increasingly likely to us that recent events could escalate into a full blown financial crisis. The issue is one of confidence."
Banks worldwide have taken charges totaling billions of dollars on holdings in mortgage-backed securities, which have been hit by a rising tide of defaults in U.S. subprime mortgages.
"The journey through the financial turmoil has ... gone back to resembling a tunnel of fear, with new scary monsters jumping out of the dark at every corner," UniCredit said in a note.
Around European markets, Germany's DAX index shed 0.5 percent, the UK's FTSE 100 index declined 1.1 percent and France's CAC 40 lost 0.6 percent.
Sainsbury plunged 21 percent as a Qatari fund dropped plans for a 10.6 billion pound bid for the British retailer, blaming worsening credit markets and the cost of winning support from the firm's pension trustees.
Among other losers, Airbus parent EADS fell 3.8 percent after it warned of a bigger-than-expected charge from the delay of its A400M military plane, forcing it to shelve its 2007 profit forecast.