• The pan-European Stoxx 600 closed down 2.3%, with banks, energy and travel shares leading the losses.
• A surge in Covid-19 cases across the continent caused by the highly transmissible delta variant continues to weigh, with several major European countries forced to reimplement social restrictions.
• The devastation caused by massive flooding around Germany and Belgium could weigh on sentiment in the region this week, as well as ongoing coronavirus concerns.

European stocks plunged on Monday as investors reacted skittishly to rising cases of Covid-19 around the world, fueled by the highly-transmissible delta variant.

The pan-European Stoxx 600 closed down 2.3%, with banks, energy and travel shares leading the losses. Carnival was the worst performer in the travel sector, sliding 8.3%.

A surge in Covid-19 cases across the continent caused by the highly transmissible delta variant continues to weigh, with several major European countries forced to reimplement social restrictions, while the U.K. lifted most remaining restrictions on Monday despite reporting a high number of daily cases.

Meanwhile, investors reacted to the news that OPEC and its allies, a group known as OPEC+, reached a deal on Sunday to phase out 5.8 million barrels per day of oil production cuts by September 2022. Coordinated increases in oil supply from the group will start in August, OPEC said in a statement.

The development comes after Brent has surged more than 40% so far in 2021, with demand for crude rising as the global economy recovers from the pandemic.

On Monday morning, international benchmark Brent crude futures plunged 5.8% to $69.32 per barrel. U.S. crude futures also declined 6.4% to $67.20 per barrel.

On Wall Street, stocks fell aggressively on fears that a rebound in Covid cases would slow global economic growth. It comes after the major U.S. averages posted their first negative week in four.

Inflation fears are also weighing on stocks after the Consumer Price Index in the U.S. last week showed that inflation jumped 5.4% in June year-over-year, spooking investors.

Separately, a U.S. consumer sentiment index from the University of Michigan released on Friday showing that consumers believe prices will jump 4.8% over the next year. This is the steepest climb since August 2008.

Back in Europe, the devastation caused by massive flooding around Germany and Belgium could weigh on sentiment in the region this week, as well as ongoing coronavirus concerns.

In terms of individual share price movement, Swedish industrial valve manufacturer Indutrade climbed 4.8% to the top of the Stoxx 600 following a strong second-quarter earnings report.

U.K. retail technology company Ocado slipped 1.9% after a fire caused by a robot collision at one of its warehouses resulted in the cancellation of thousands of orders.

Meanwhile, in corporate news, Chinese tech giant Tencent announced a deal to buy British video game developer Sumo Group for $1.26 billion, sending the latter's shares up more than 40%.

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- CNBC's Ryan Browne, Eustance Huang and Pippa Stevens contributed to this market report.