In Paris, the CAC-40 index fell 70.57 points to 3,980.19 points, after plunging through the 4,000-point support level. The decline was headed by Renault, which was trading down 12.80 French francs at 326.30 francs.

Banking stocks took new losses as they considered the need to raise provisions against potential Asian loan losses.

In Frankfurt, the Dax index lost 2.53 per cent to 5,527.32 points. In Amsterdam, the AEX index lost 2.74 per cent to 1,142.99 points, while in Madrid the Ibex-35 index fellby 143.80 points to 9,604.30 points.

London's main Footsie index had moved ahead slightly in initial trading after Friday's sharp falls as bargain hunters explored the market.

But the trend was quickly reversed, as fears bit in that too steep drop in the Yen could spark a round of currency devaluations in the region.

There were also fears of market volatility, caused by low trading volumes or vulnerability to rogue trades, because many traders were absent as a result of the London underground train strike and the televised football.

The head of research at NatWest Stockbrokers, Jeremy Batstone, said: "Companies in the city are recognising that there is going to be a lot of interest in this afternoon's game between England and Tunisia. Dealing rooms are more quiet than usual because of the large number of absentees," he said. Investors were also waiting for publication of May inflation figures on Tuesday and unemployment figures for February-April which are due to be published on Wednesday. BritishSteel, which reported a 30-per cent fall in profits, saw its shares slide by 1.5 pence to 133 pence a share.

Falls were also marked in the financial sector with Barclays dropping 38 pence to 1,630, NatWest falling 7 pence to 1,075 and Lloyds TSB down 1.5 pence to 863,5. Shares with an Asian exposure fell including HSBC which shed 15 pence to 1, 418,Cable and Wireless which lost 12 pence to 659. Standard Chartered bucked the trend adding 14 pence to 640.