Euro zone debt jitters and renewed fears about the United States' finances weighed on Europe's FTSEurofirst 300 index, which hit a six-week low on Monday and is set for its second-worst November since the index's launch in 1997.
Shares extended losses after rating agency Moody's expressed worries that a recent rise in interest rates on French government debt and weaker economic growth prospects could be negative for the country's credit rating.
French bank shares were among the biggest decliners in a 2.8 percent weaker STOXX Europe 600 Banks index, with BNP Paribas and Societe Generale both shedding 5 percent.
Adding to euro zone debt worries, U.S. congressional sources said over the weekend Republicans and Democrats on a deficit-reduction panel are expected to announce on Monday they have been unable to reach a deal after months of effort.
At 11:30 a.m. (British time), the FTSEurofirst 300 index of top European shares was down 2.4 percent at 928.03 points, losing ground for the fifth time in six sessions.
The index is down 6.6 percent so far this month, and is on track to record its worst November since 2008, when the index lost 7.2 percent after the collapse of Lehman Brothers.
The euro zone's blue chip Euro STOXX 50 index was down 2.6 percent at 2,178.67 points, breaking below a key support level, the 50 percent Fibonacci retracement of the market's recovery rally started in late September.
Investors scrambled to close out of equity positions, Manoj Ladwa, trader at ETX Capital, said. U.S. political leaders failing to agree on cutting the budget deficit is only adding further fuel to the fire.
Trading volumes were thin at levels of between 20-30 percent of 90-day daily average by midday.
Worries about debt-heavy Belgium's ability to form a new government to reign in its deficit sharply have pushed up spreads of Belgian 10-year bonds over benchmark German Bunds this month. Spreads reached euro era highs of 314 basis points last week and have stayed just below these levels since, and Belgian financial group KBC was under pressure.
KBC fell as much as 15 percent to their lowest since March 2009.
Across Europe, the UK's FTSE 100 index was down 2.1 percent, France's CAC 40 dropped 2.6 percent and Germany's DAX index lost 2.7 percent.
The German blue chip index is heading for its sixth negative session, which would be its longest losing-streak since early August.
The index continues to be more sensitive to macro-economic drivers than its peers, especially in the absence of other news, a German trader said.
Cyclical miners followed the trend with Rio Tinto, down 4.8 percent, weighing on the European index tracking lower commodities prices. Copper was down 2.5 percent, while aluminium prices were down 1.3 percent. Shares in Xstrata lost 3.7 percent.
(Additional reporting by Hakan Ersen in Frankfurt and Blaise Robinson in Paris; Editing by Mike Nesbit)