The oil rally, with prices breaching the $100-a-barrel mark, has sparked deep concerns over an inflationary shock that could severely strain global economic growth.
European indices followed a sharp downturn in Tokyo, where the Nikkei plunged over 5%, while U.S. futures are trading down by more than 1.5%.
By 9:35 a.m., Milan's benchmark FTSE Mib index was down 2.2%, slipping below the 43,000-point threshold for the first time since early December.
Banking stocks are in freefall, averaging a 3.2% loss, with UNICREDIT down 3.6%, MPSI shedding 3.5%, and INTESA dropping 3.4%.
The sell-off has spared few sectors, with industrials and utilities also facing heavy pressure.
Among the few bright spots, NEXI is attempting a rebound, gaining 4%. Morgan Stanley upgraded the payments firm to 'equal weight' from 'underweight' following a sharp decline in the final sessions of last week.
LOTTOMATICA is also performing well, up 1.1% after Barclays raised its target price to 31 euros from 26 euros.
LEONARDO is losing momentum despite an upgrade by Barclays to 'overweight' from 'equal-weight'.
(Andrea Mandala, editing Claudia Cristoferi)
