The euro also hit a new four-month low against the dollar as a downgrade hit 16 Spanish banks ahead of a key G8 meeting, rattling investors.
London's FTSE losing 1.3% to 5,268. In Frankfurt, the DAX dropped 0.6% to 6,271 and in Paris the CAC fell 0.1% to 3,008.
In Dublin, the ISEQ closed down 12 points (0.4%) to 3,014 with CRH gaining 2.2% at €13.73 and Paddy Power adding 1.8% to €49.35. Ryanair lost 3.4% to €4.02 and Smurfit Kappa was down 2.6% at €5.70.
On Wall Street shares briefly bucked the trend amid excitement over the social network Facebook's historic market debut, but later turned lower as the stock listing fell short of expectations. The shares, priced at $38 on Thursday in the largest-ever initial public offering for a technology company, jumped 12% to $42.55 in the opening Nasdaq trades but within minutes fell back to the offering price. The Dow Jones was down 0.2% at 12,415, while the Nasdaq, where Facebook's shares now trade, was up 0.3% at 2,804.
Earlier in Asia, stocks were weak and Tokyo's Nikkei closed with a fall of 3% to 8,611 - its lowest finish in four months as signs of weakness in the US, a critical export market for Japanese companies, battered some of the country's behemoth manufacturers. The Hang Seng index in Hong Kong dropped 249 points (1.3%) to finish at 18,952.
