European stock markets were sharply lower in afternoon trading. London's Financial Times 100 index lost 3.4 percent, the CAC-40 in Paris fell 4.5 percent, and the DAX in Frankfurt plunged 5.2 percent.

Earlier in Asia, Tokyo's Nikkei index dropped 1.9 percent to close at 8,784. Hong Kong's Hang Seng index lost nearly three percent to end at 19,616.

U.S. stock market were closed for a holiday on Monday.

The price of gold rose more than $14 to trade at $1,897.14 an ounce.

The dollar was higher against the yen and the euro.