London's FTSE, packed with trade-sensitive mining and energy stocks, lost 1.8%%, the most in the region, as material shares lost 1.6%. Weaker crude prices saw oil shares post their biggest one-day drop in a month.[O/R]
Trump said he had no deadline to strike an agreement with China, adding it could come after 2020 U.S. elections, denting hopes of a near-term resolution to a dispute that has weighed on the world economy.
This came amid fears of expanding trade disputes. [GVD/EUR]
Washington on Monday warned of punitive duties of up to 100% on $2.4 billion in imports from France, saying its new digital services tax would harm U.S. tech companies. France and the European Union (EU) said they were ready to fight back.
Meanwhile, the World Trade Organization's rejection of EU claims that it did not provide subsidies to Airbus prompted the United States to say it could raise retaliatory tariffs on a wider range of European goods.
Airbus shares fell 4.4%.
Along with drops in luxury shares LVMH, Kering and Hermes, the Paris index slid 1%.
Reversing session gains, the pan-European stocks index closed down 0.6%, after logging its worst selloff since Oct 2. on Monday.
"The current sell-off ... is yet another reminder of market's exceptionally high sensitivity to trade headlines, and underscores fragility of the latest risk rally," said Marija Veitmane, a senior strategist at State Street Global Markets.
European shares had rallied over the last three months on hopes of a U.S.-China trade deal, and some calm on the Brexit front.
German shares, meanwhile, ended up 0.2% thanks to rallies in software firm SAP and MTU Aero Engines which rose after a BoFA Merrill Lynch upgrade to "buy".
Italy's blue-chip index finished marginally higher, supported by gains in Ferrari after a Goldman Sachs target price hike and utility Enel after it made a bid for Renvico wind farm portfolio in Italy and France.
Among other bright spots, telecom companies Ericsson and Nokia rose on a media report that said Washington is considering financial aid to countries that would source telecoms equipment from firms other than China's Huawei.
By Susan Mathew