Chinese stocks plummeted nearly seven percent Monday - the worst first day of trading for the new year in China - prompting a halt to trading for the day on the Shanghai and Shenzhen exchanges.
European markets followed Asia's lead, opening lower, with Germany's DAX down more than four percent and the FTSE in London more than two percent lower.
Poor manufacturing data in the world's second-largest economy is mainly being blamed for the sharp selloff, along with rising tensions in the Middle East.
Japan's Nikkei index closed down 3 percent and Hong Kong's Hang Seng fell more than two-and-a-half percent.
The price of oil rose Monday, mainly over concerns in the Middle East with Saudi Arabia in a tense political dispute with Iran.