The pan-European STOXX 600 fell 0.3 percent.
"The number one driver for global risk sentiment is the U.S.-China trade talks, which suddenly don't look as promising as they did over the weekend," wrote Commerzbank rates strategist Christoph Rieger.
The tech sector was also a big loser, down 0.9 percent.
Chipmakers, which are also heavily exposed to China and trade sustained heavy losses with AMS down 4.7 percent, Siltronic down 3.8 percent.
Adding to the weak sentiment, the yield curve between U.S. three-year and five-year notes and between two-year and five-year inverted on Monday, a first since the financial crisis, excluding very short-dated debt.
Analysts now fear an inversion of the two-year, 10-year yield curve could be imminent and point towards a possible U.S. recession.
"Recessionary fear is starting to raise its ugly head," wrote Stephen Innes at broker Oanda.
France's JCDecaux posted one of the worst individual falls, down about 6 percent after Exane BNP Paribas reinitiated its coverage of the stock with an "underperform" rating.
French catering group Elior sank 7.3 percent after cutting its sales growth outlook, and Belgian postal services firm Bpost plunged 20 percent after a profit warning.
Energy stocks were among the few gainers as oil prices rose amid expected OPEC-led supply cuts and a mandated reduction in Canadian output.
BP rose 0.6 percent and Royal Dutch Shell 0.5 percent.
German industrial gases group Linde will replace British bank Barclays on the leading index of pan-European stocks STOXX Europe 50 STOXX Ltd, the operator of Deutsche Boerse Group's index business, said.
The change comes as part of the quarterly reshuffle and will be effective at the opening of European trading on Dec. 24, STOXX said on Monday. (Additional reporting by Abhinav Ramnarayan and Helen Reid; Editing by Alison Williams)
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)