China's latest stab at quelling inflation and concerns that Greece may default on its debt undermined investor confidence in global stocks.
Britain's FTSE 100 was 1 percent lower, while Germany's DAX slipped 1.1 percent and France's CAC-40 was down 1.5 percent.
Wall Street was headed toward a lower opening as well, with Dow Jones industrial futures off 0.6 percent to 12,231 and S&P 500 futures down 0.7 percent to 1,309.80.
China's central bank announced that the deposit reserve ratio for most banks would be raised -- the fourth reserve increase this year -- after inflation jumped to a 32-month high in March. Fears about overheating have overshadowed prospects for global economic growth.
Investors were also unnerved by a Greek newspaper report that said the government had asked the International Monetary Fund and European Union to start discussions on a restructuring. A Greek finance ministry source said the report was not true.
Also jarring markets was a decision by Finnish voters to hand the anti-euro True Finns party a crucial role in parliament. Finland's parliament has the right to vote on European Union requests for bailout funds, meaning it could hold up costly plans to shore up Portugal and bring stability to debt markets.
Financials were the worst hit, with the European banking index falling 1.6 percent and the Thomson Reuters Peripheral Banking index down 3 percent.
The euro hit a 10-day low against the dollar, down 0.8 percent to $1.4319 (U.S.).
Safe-haven buying in gold and silver pushed the precious metals to new record highs, though the U.S. dollar's rise against the euro limited gains. Spot gold rose as high as $1,488.50. Silver touched a new 31-year high at $43.35 an ounce. It has been the best-performing precious metal so far this year, up 39 percent since January.
Copper edged higher as investors closed short positions after five straight days of price declines.
Oil prices fell below $109 a barrel after a cut in output from oil exporter Saudi Arabia, which said the market was over-supplied. That sparked concerns over whether high prices are severely limiting demand.
Japan's Nikkei 225 index fell 0.4 percent to close at 9,556.65, with shares of Toyota Motor Corp. falling 0.5 percent as it remained unclear when the world's No. 1 automaker would resume full production in Japan.
Hong Kong's Hang Seng dropped 0.7 percent to 23,830.31 and South Korea's Kospi slipped 0.1 percent to 2,137.72.