The benchmark STOXX 600 index was down 4.6pc as dramatic intervention by global policymakers could not stem the biggest global market sell-off since the 2008, financial crash.
Travel and leisure, mining and industrials stocks again led declines on the main index as the relentless spread of COVID-19 brought economic activity to a grinding halt, foreshadowing a deep and lasting global recession.
Goldman Sachs said on Monday it expected global real GDP to contract by about 1pc in 2020 on the back of a 24pc drop in the United States in the second quarter, a whopping two-and-a-half times as large as the previous postwar record.
"Risk aversion appears here to stay as investors become more fearful that this could be the worst global recession during peacetime," Edward Moya, a senior market analyst at broker OANDA.
"Volatility was supposed to start to calm down as central banks unleashed ... liquidity programmes and stimulus, but coronavirus updates in Europe and the US continue to suggest we are nowhere near being out of the woods."
Greece joined France and Spain in announcing a nationwide lockdown, while Italy banned even domestic travel as the number of fatalities there topped 5,400. German chancellor Angela Merkel went into quarantine after coming into contact with an infected doctor.
The benchmark STOXX 600 has lost more than 30pc - or $4 trillion - in value from record highs hit last month, as the epicentre of the outbreak shifted to Italy from China, while Europe's fear gauge is at levels last seen in 2008.
In the latest sign of growing corporate damage from paralysed supply chains and consumer spending, Airbus fell another 9pc after saying it was withdrawing its 2020, financial forecast, dropping a proposed 2019 dividend and suspending funding to top up staff pension schemes.
The company, which recently replaced Boeing as the world's top planemaker, has lost more than half its value since February as measures to contain the outbreak brought global travel to a virtual standstill. Boeing, by contrast, is down more than 70pc.
French energy group Total fell 3.2pc after announcing plans to step up cost cuts and suspend its share buyback programme in order to deal with a slump in oil prices.