European stocks finished modestly higher Monday, but the French telecom sector was hit hard as merger talks between Orange SA and Bouygues SA fell apart.

U.S. stocks slumped on Monday as losses for industrials and materials offset sharp gains in health-care shares. Meanwhile, a fresh drop in oil prices weighed on risk appetite, eroding investor confidence after last week's comments from Federal Reserve Chairwoman Janet Yellen helped support stock advances.

Asian stocks slumped to a four-week low and emerging-market currencies weakened as investors reassessed last month's rally in riskier assets. Oil declined for a third day, while the yen and Treasuries gained.

Based on MarketWatch materials