European shares fell to a two-week closing low on Monday, with peripheral stocks heavily sold-off on escalating worries about the threat of contagion from the euro zone debt crisis which could force more countries to require financial aid.
The pan-European FTSEurofirst 300 index of top shares provisionally closed 1.5 percent lower at 1,097.77 points, its lowest closing level since June 28.
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Italian shares fell 4 percent on strong volume to hit its lowest level in more than a year on fears the euro area's third-largest economy, which has one of the largest public debts in the world, could be next to succumb to the region's debt crisis.
"Considering the side of the Italian economy the impact (of debt contagion) will be much bigger than Greece. If the right measures are not introduced, this might impact the creditworthiness of the whole euro zone," said Anita Paluch, sales trader at ETX Capital.
Shares in Italy's largest retail bank Intesa Sanpaolo slid 7.7 percent. French banks, which have large exposure to Italy, were also hefty fallers with Societe Generale , BNP Paribas and Credit Agricole off 5.9 to 7.7 percent.