- The pan-European Stoxx 600 closed down 1.5 percent, slipping to its lowest level since December 2016.
- Germany's DAX index led the losses among the major bourses, off more than 2 percent.
- Market players reacted to earnings as well as news that the European Commission has rejected Italy's 2019 budget proposal.
The pan-European Stoxx 600 was provisionally down 1.49 percent by the end of trade, slipping to its lowest level in almost two years. Germany's DAX index led the losses among the major bourses, falling more than 2 percent. The export-heavy DAX is seen as particularly exposed to any slowdown in global demand.
Europe's technology stocks were among the worst performers, falling by over 3.6 percent amid earnings news. Shares of Austrian chipmaker AMS tumbled almost 27 percent after the company's outlook for the final three months of the year failed to convince investors.
Finland's Wartsila posted weaker-than-expected quarterly profit on Tuesday, citing subdued demand for its service business. Shares of the ship technology and power-plant maker fell almost 8 percent on the news.
Meanwhile, Britain's Travis Perkins surged towards the top of the European benchmark after it said its full-year performance was in-line with expectations. The U.K.'s largest supplier of building materials said solid demand from trade buyers offset pressure in other areas of its business. Shares of the London-listed stock rose around 3.5 percent.
Elsewhere, the European Commission told lawmakers in Italy that it must make revisions to its draft budget proposal. This sent bond yields higher and further weighed on sentiment towards stocks listed on the FTSE MIB. Italy's Deputy Prime Minister Luigi Di Maio claimed that the EU ruling was no surprise, but his country could not continue with past policies that enforced low fiscal spending.
Market focus also paid attention to the killing of journalist Jamal Khashoggi at a consulate in Turkey earlier this month. President Donald Trump said Monday that he was not satisfied with what he had heard from Saudi Arabia, amid intensifying international pressure to explain exactly what happened to Khashoggi.
In the United States, the Dow Jones Industrial Average had dropped 500 points by the time of Europe's close. Caterpillar and 3M were the biggest decliners. The S&P 500 plunged 2.2 percent as the industrials and tech sectors underperformed. The Nasdaq Composite plummeted 2.7 percent, entering correction territory.