Trade-sensitive sectors such as miners, technology and industrials were particularly hit hard, with negative updates from Thyssenkrupp and Fiat Chrysler adding to the downbeat mood.
The German conglomerate scrapped its dividend for the first time in six years and reported a full-year net loss that widened five-fold after failed attempts to turnaround its business.
Thyssenkrupp's shares fell 10pc, on track for their biggest percentage loss in over three years.
Fiat Chrysler dropped 2.7pc after General Motors filed a lawsuit, alleging that its rival bribed United Auto Workers union officials over many years to corrupt the bargaining process and gain advantages.
A Reuters report that completion of a "phase one" trade deal could slide into next year raised fears that a fresh round of US tariffs on Chinese goods in December could trigger a global slowdown.
Further adding to woes, U.S President Donald Trump is expected to sign two bills passed by Congress intended to support protesters in Hong Kong.
"Recently, we've seen optimism that at one point there will be a trade deal, but the news overnight shows that there is not much certainty to that," said Elwin de Groot, head of macro strategy at Rabobank.
"These moves are a reflection of some investors increasingly questioning whether there will now be a trade deal at all."
Hopes that the two sides will be reaching a deal soon and somewhat better-than-expected earnings reports had driven European stocks to a four-year peak earlier this week.
However, the pan-European STOXX 600 index slid 0.7pc to its fourth day of losses, while trade-sensitive shares of Germany and France dropped 0.5pc and 0.6pc, respectively.
British postal company Royal Mail slumped 17pc to the bottom of the STOXX 600, after saying its plan to expand its parcels business internationally was behind schedule even as it posted a first-half operating profit.
French luxury group LVMH slipped 1.1pc after Reuters reported it had persuaded US jewelry chain Tiffany to provide access to its books after it raised its bid to close to $16 billion.
Among a few bright spots was British American Tobacco , up 5.5pc after the US regulator dropped plans to sharply cut nicotine in cigarettes.
British utility Centrica gained about 8pc after saying it was on track to meet its full-year cash flow and earnings targets and raised its expected efficiency savings by 50 million pounds ($65 million).