European stocks slipped further into the red Monday, marking three straight sessions of declines, with basic resource and financial stocks suffering the worst of the selling.
Concern over the continuing credit crisis and slowing economies dented investor sentiment, along with a warning from European Central Bank President Jean-Claude Trichet that excessive currency moves were undesirable for economic growth.
Mining stocks such as Rio Tinto, BHP Billiton and Anglo American dragged on the European indexes, driven by declining copper prices.
"People are concerned at signs that the financial system is not repairing itself, and that earnings outside the financial sector are now going to get hurt," said John Haynes, strategist at Rensburg Sheppard Investment Management.
"Logically hedge funds should be the next victim and people who deal with hedge funds, the prime brokers, those who supply capital."
"Interest rate cuts are not enough -- this is beginning to go beyond the Fed," he said.
U.S. stocks fell as traders cited talk that a Wall Street firm faced liquidity concerns, pulling down financial shares and adding to anxiety about the credit crisis.
In European politics, Spain's governing Socialist Party won Sunday's election and Prime Minster Zapatero was re-elected. But his party failed to gain an overall majority, weakening their ability to act on the slowing economy.
In other political news, French President Nicolas Sarkozy faced a setback as the Leftist opposition took the country's two largest cities, Paris and Lyon, in the first round of regional elections.
In Germany, train drivers called off planned strikes after the GDL union convinced operator Deutsche Bahn that its 8 percent pay deal will stand, irrespective of agreements with other unions.
In corporate news, shares of HSBC were 1.5 percent higher on reports the UK bank will try to raise its stake in China's fifth-largest lender, the Bank of Communications, as part of its shift into the Asian markets.
Meanwhile, shares of the UK's Bovis Homes sank over 12 percent after it warned volumes will be significantly lower if the current market conditions do not improve soon.
EADSis seeking acquisitions in the U.S. according to an internal memo obtained by Reuters. The company prepares to announce weak dollar-inspired full-year losses on Tuesday.
Also on the M&A front, China's Bank of Communications is on the lookout for stakes in European and U.S. banks, but refused to name potential targets.
-- Reuters contributed to this report