European shares lost ground on Tuesday amid fears linked to swine flu and reports that banks in the United States may need more capital.
Regulators are talking to Citigroup Inc about its capital levels after stress testing the bank, and the Wall Street Journal reports that Bank of America Corp may need billions in fresh capital.
However, consumer confidence in the United States rose in April to the highest level since November.
The FTSEurofirst 300 index ended 1.5% lower at 801.24 points.
Shares in Deutsche Bank fell 6.9% although Germany's biggest bank reported stronger than expected earnings for the first-quarter.
In Frankfurt, the DAX index ended at 4607.42 points, down 86.65 or 1.85%. In Paris, the CAC-40 index closed at 3051.02 points, down 51.41 or 1.66%.
The Swiss market index closed at 5109.09 points, down 66.88 or 1.29%.
In London, the FTSE 100 was 70.61 points lower, 1.7%, at 4,096.40.
Shares in Lloyds Banking Group, Royal Bank of Scotland, Barclays, HSBC and Standard Chartered down between 0.9% - 4.9%.
Earlier, in Tokyo, the Nikkei index fell 232.57 points, 2.7%, to 8,493.77, its lowest close since 1 April.
In Hong Kong, the Hang Seng Index closed down 285.31 points, 1.92%, at 14,555.11 - its lowest finish since 8 April.
In Australia, the S&P/ASX 200 index ended down 23.2 points at 3,708.4 and the All Ordinaries fell 18.3 points to 3671.7.
On the Sydney Futures Exchange, the June share price index contract was 27 points lower at 3,689 on a volume of 33,489 contracts.
In New Zealand, the NZX50 closed up 22 points at 2686 on turnover of $56 million.
The dollar was trading at 55.45 US cents, 79.05 Australian cents, 38.03 pence, 53.29 yen and 0.4264 euro. The Trade Weighted Index was 55.45.