The pan-European STOXX 600 <.STOXX> touched its lowest level this month and ended the session down 0.7 percent after Catalonia failed to meet a deadline set by Madrid to renounce its independence bid, setting Prime Minister Mariano Rajoy on course to impose direct rule on the region.
Madrid's IBEX <.IBEX> also fell 0.7 percent.
Bank stocks <.SX7P> were out of favour, down 0.8 percent, with Banco Sabadell (>> Banco de Sabadell) dropping 1.7 percent, the second-biggest weight on the index after HSBC (>> HSBC Holdings).
"The market is going in risk-off mode", said Pierre Martin, a senior sales trader at Saxo Bank, said.
Elsewhere some big, earnings-related falls also soured the move, with shares in advertising group Publicis (>> Publicis Groupe) dropping 6.6 percent after third-quarter sales were below market forecasts.
German forklift truck and robotics maker Kion (>> Kion Group) was another big faller, plunging 13 percent after it cut its 2017 guidance, while British mid cap IWG (>> IWG - International Workplace Group) slumped 32.2 percent on the back of a profit warning.
Unilever (>> Unilever) fell 5.5 percent as its underlying sales growth missed analysts' consensus, having lost market share to smaller rivals.
"Unilever seems to believe that annual growth goals can still be met, despite being blown off course in the third quarter," Ken Odeluga, market analyst at City Index, said in a note.
"But without a step change in growth initiatives investors will remain restive - just as activist groups are tightening their focus on health and personal care giants," Odeluga added.
The drop in Unilever's shares weighed on Europe's personal and household goods <.SXQP> index, which dropped 2 percent and posted its worst day in three months.
On the positive side, French retailer Carrefour (>> Carrefour) and spirits group Pernod Ricard (>> Pernod Ricard) were both up 3.4 percent after their results.
More broadly on earnings, Saxo Bank's Martin argued that while the initial reaction from investors seemed to be negative, it was still too early to get a clear picture of Europe's third-quarter earnings season.
European third-quarter earnings are seen growing 4.5 percent from the same period in 2016, an increase of 1.3 percent excluding the energy sector, according to Thomson Reuters I/B/E/S data.
(Reporting by Julien Ponthus and Kit Rees)
By Julien Ponthus and Helen Reid