The FTSE 250 was down just under 1% at 17,752, Germany's DAX 30 fell 1.5% to 10,465 while the Stoxx Europe 600 slid 1.4% to 340 by late morning.
The biggest fallers in the FTSE 100 were Intercontinental Hotels Group which lost 4.2%, Lloyds Banking Group which fell 3.5% and housebuilders Taylor Wimpey and Barratt Developments which fell 3.4% and 3.3% respectively.
Investors have seemingly been spooked by a triple helping of things to worry about.
First, there are fresh concerns over the health of European banks, with Deutsche Bank in particular worrying investors.
The German bank saw its shares nearly 6% down at €10.80 after the German government declared it would not provide it with state support.
The next issue investors were watching is the prospect of fresh cuts in the oil supply, with the major crude exporters set to meet this week for talks.
The price of WTI Crude rose just over 1% to sit at $44.96, while Brent crude was up 1.4% to $46.55.
The third of the three factors hitting sentiment was nervousness over tonight’s Presidential debate. Donald Trump and Hillary Clinton are set to go head to head for the first time and most commentators expect the proceedings to have a big impact on the outcome of the vote on 8 November.
“The new week has started with a bang, as the parlous state of Deutsche Bank explodes onto everyone’s radar once again,” said Chris Beauchamp, chief market analyst at IG. “The bank has been limping along for months now, but reports that Angela Merkel may not step in to rescue the bank have sent the shares tumbling, dragging banks across the UK and Europe lower as a result.”
“The gut feeling of most investors is that Berlin would be forced to act to avoid the loss of a key institution, but gut feelings do not always make the best trades,” Beauchamp continued. “After a strong week for equities it looks like we are in for a swift reversal, as the last week of September lives up to its billing as being a particularly difficult one for stock markets. However, it is always darkest before the dawn, as the final quarter is historically one of the most solid periods for equity bulls.”
Beauchamp added that while ‘no fireworks are expected’ at the meeting of oil exporters, the overall tone is likely to be one of ‘amicable hostility'. “The result will be that the can is kicked down the road to the next OPEC meeting at the end of November,” he said.