European shares sank 6 percent in late trade on Monday as sharp falls on Wall Street accentuated a sell-off led by banks and commodity shares.

The FTSEurofirst 300 index of top European shares was down 5.9 percent at 1,025.78 points after hitting a low of 1,023.70.

Across the Atlantic, the Dow Jones industrial averagetraded 3 percent lower after briefly falling below the psychologically important 10,000-mark, while the Nasdaq and the S&P 500, lost 3.9 and 3.8 percent respectively.

In Europe, Royal Bank of Scotland lost 19.2 percent, while UBS fell 12.5 percent and Barclays lost 13.9 percent.

Energy stocks were also sharply weaker, with Total, BP and Shell losing more than 6 percent as oil fell to just above $90 a barrel.