Europe Markets

European stocks sink on Evergrande fears; banks slide 4%; German Dax down 2%

Key Points
  • European banking stocks tanked 4.1% on average, posting their worst session so far this year.
  • Fears over embattled Chinese property developer China Evergrande Group shook investor sentiment.
  • The U.S. Federal Reserve begins its highly anticipated September meeting this Tuesday.

LONDON — European stocks closed sharply lower on Monday as market sentiment was shaken by fears surrounding embattled property developer China Evergrande Group.

European markets

The pan-European Stoxx 600 index ended the session down by 1.7% provisionally. European banking stocks tanked 4.1% on average, posting their worst session so far this year. Among major bourses, the German Dax was down around 2.3%.

The negative session for Europe come as global stocks continue to struggle in September, traditionally a weak month for markets, with the Dow Jones Industrial Average on track for its biggest one-day drop since July 19.

Hong Kong's Hang Seng index led losses among Asia-Pacific markets in overnight trade on Sunday, with shares of embattled Chinese developer China Evergrande Group continuing to drop. Markets in mainland China, Japan and South Korea were closed on Monday for holidays.

Read More: China's embattled developer Evergrande is on the brink of default. Here's why it matters

Global markets are also experiencing some jitters ahead of the U.S. Federal Reserve's highly anticipated September meeting, which starts Tuesday. Fed Chair Jerome Powell will hold a press conference Wednesday at the conclusion of the two-day meeting with investors keen to pick up any indications about the Fed's tapering of its easy monetary policy.

Powell has said the tapering could occur this year but investors are waiting for more specifics, particularly after mixed economic data released since Powell's last comments. U.S. stock futures were mixed in overnight trading Sunday.

There were no major earnings releases in Europe on Monday.

In individual stocks news, Prudential shares tanked 8.4% after the company announced a Hong Kong share sale.

Meanwhile, AstraZeneca shares rose 6.2% after announcing promising results for a breast cancer drug.

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- CNBC's Ryan Browne, Hannah Miao and Eustance Huang contributed to this market report.