Global stocks and oil prices fell more than 3% early Monday (December 20).
That as investors feared the return of restrictions due to a surge in cases of the Omicron variant.
The fast spread of the coronavirus variant saw the Netherlands go into lockdown on Sunday - with pressure now on other countries to follow over Christmas and New Year.
German leaders are also due to meet Tuesday (December 21) to decide on whether to introduce tougher contact restrictions.
The pan-European STOXX 600 was down just over 2%, falling to its lowest level in more than two weeks.
Investors were also spooked by comments from a United States Senator on Sunday (December 19).
Democrat Joe Manchin said he would not support President Joe Biden's $1.75 trillion domestic investment bill.
That saw Goldman Sachs cut its U.S. real GDP forecast for the first quarter of next year to 2%, down from a previous 3%.
Markets outside Europe and the U.S. were also hit by fear of new restrictions.
MSCI's index of Asia-Pacific shares outside Japan and emerging market stocks slid to their lowest in a year.
Japan's Nikkei dropped just over 2%.
Oil prices also swung lower due to concerns that the variant would hurt demand for fuel and signs of improving supply.
Brent was down more than 3% to around $71 a barrel.
New restrictions have clouded the outlook for economic growth and also risk keeping inflation elevated.