London - Europe's main stock markets slid on Monday amid renewed tension over the eurozone debt crisis, particularly over the outlook for Spain and Portugal, dealers said.
The mining sector was meanwhile hit by falling commodity prices, and British energy giant BP was struck by news of a pipeline shutdown in Alaska.
On the upside, British pharmaceuticals group Smith & Nephew saw its share price rocket by more than 11%, after a weekend media report about a potential takeover bid from US giant Johnson & Johnson.
London's FTSE 100 index lost 0.51% to 5 953.86 points, Frankfurt's DAX 30 index shed 0.72% to 6 898.45 points and the Paris CAC 40 dived 1.39% to 3 811.75.
The Stoxx 50 index of leading eurozone companies sank 1.14% to stand at 2 776.30 points.
"The eurozone is back in focus, specifically the possibility of Portugal having to tap the EU's bailout fund," said economist Ian Williams at Altium Securities.
Tensions rose on eurozone bond markets on Monday with Spanish and Portuguese debt rates hitting record levels ahead of a critical week of debt issues amid concerns that another bailout may be looming.
The rate or yield on Spanish 10-year debt hit 5.562% from 5.526% on Friday at the close, the highest rate since 2000, before dropping to 5.554% at midday.
The rate on Portuguese 10-year debt rose to 7.139% from the closing value on Friday, when it reached a record of 7.193% during trading.
Investors are concerned that when Spain and Portugal issue more debt this week, they will have to offer exceptionally high interest rates to attract lenders.Lower commodity markets
"This week's Spanish and Portuguese bond auctions will likely highlight potential funding pressures and the need for European Central Bank (and China) support. Rescue packages will be required at some stage," said VTB Capital economist Neil MacKinnon.
Much of the focus was on Portugal, following weekend reports that France and Germany were seeking to push it to accept a bailout from the European Union and the International Monetary Fund.
Joshua Raymond, market strategist at trading firm City Index, said that investors were also fretting over lower commodity markets ahead of crucial earnings news from US aluminum giant Alcoa.
"European indices started the week with losses and investors, as continued selling in commodity share sectors, such as energy and mining firms forced the FTSE 100 and other indices lower," Raymond said.
"Alcoa kicks off the start of the US fourth quarter earnings season tonight and so investors are holding fire for now, waiting to see which way the wind blows before making their next move."
The British stock market was also pulled lower by energy giant BP, whose share price dived after news of a major pipeline shutdown in the United States.
The key trans-Alaska pipeline, which carries an estimated 12% of US crude output, was closed over the weekend.
The operator, Alyeska, said in a statement that its trans-Alaska pipeline remained shut on Sunday after a leak which was discovered on Saturday at a pump station. BP is the biggest oil producer in Alaska.
In earlier trading on Monday, Asian markets were mixed as investors digested disappointing US jobs data and European debt woes resurfaced amid concerns Portugal might need a bailout.
Hong Kong fell 0.67%, Seoul shed 0.26% and Singapore closed down 0.98%.