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NEW YORK (CNNMoney) — U.S. stocks started the week with a steep sell-off Monday, following last week’s stellar gains, as worries about Europe’s debt crisis dominated.

“There’s a lot of concern about how much time it will take for Europe to get its collective act together,” said Tom Schrader, managing director at Stifel Nicolaus.

Mixed earnings reports from Citigroup and Wells Fargo and a disappointing report on regional manufacturing also dampened investor sentiment.

The Dow Jones industrial average (INDU) ended down 247 points, or 2.1%, with shares of Alcoa (AA, Fortune 500) and Hewlett Packard (HPQ, Fortune 500) falling the most. The SP 500 (SPX) fell 24 points, or 1.9%, and the Nasdaq (COMP) lost 53 points, or 2%.

Over the weekend, finance ministers from the world’s largest economies pledged to take “all necessary actions” to stabilize global financial markets and ensure that banks are well-capitalized. (G-20 finance chiefs back Europe bank rescue)

Officials promised to have a comprehensive plan to secure the banking system and address Europe’s sovereign debt problems in place by next Sunday, when the European Council meets in Brussels.

But early Monday, German Finance Minister Wolfgang Schaeuble tempered those expectations, saying that a final solution to Europe’s debt crisis is unlikely to come out of the upcoming meeting.

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The uncertainty had investors hitting the brakes after two straight weeks of gains. Stocks rallied Friday, with the Dow and Nasdaq ending in positive territory for the year. The SP 500 came close.

“As last week’s market gains attest, the direction of the financial markets remains highly dependent on the degree to which politicians and policymakers can create a solution to the European debt crisis,” Bob Doll, chief equity strategist at BlackRock, said in a client note.

Though recent progress has been encouraging, “it is impossible to accurately determine whether the worst of the crisis has passed or whether we have only begun to see the negative impact of the region’s debt problems,” Doll added.

As investors mull over the gloomy future, the market’s fear gauge, the VIX (VIX), spiked 16% Monday to 32.89. Any reading above 30 signals investor worry.

While Europe will remain in focus on Wall Street, earnings news will give investors something else to chew on, and positive results and guidance from companies could help stocks break above the recent trading range, said Matt King, chief investment officer at Bell Investment Advisors.

Monday’s corporate news was mixed. Citigroup (C, Fortune 500) reported earnings and revenue that beat expectations, while Wells Fargo (WFC, Fortune 500) posted results that fell short of forecasts.

Economy: The Empire State manufacturing index remained in negative territory for a fifth consecutive month. The index came in at negative 8.5 in October, little changed from negative 8.8 in September. The index was forecast to have improved slightly to negative 4 in October, according to consensus estimates from

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A separate report showed that industrial production edged up 0.2% in September, after rising the same amount in the previous month, matching the forecast from

Companies: Pipeline operator Kinder Morgan (KMI, Fortune 500) announced Sunday that it is acquiring rival El Paso (EPB) for $38 billion in cash, stock and assumed debt. The acquisition between Kinder Morgan and El Paso is the second-largest MA deal announced this year, just behind the $39 billion ATT (T, Fortune 500) purchase of T-Mobile.

Oil producer BP (BP) announced Monday that it reached an agreement with Anadarko Petroleum (ADC) to settle all claims between the companies related to the Deepwater Horizon accident. As part of the settlement, Anadarko will pay BP $4 billion in a single cash payment and both parties have agreed to mutual releases of claims against each other.

Shares of Green Mountain Coffee Roasters (GMCR) dropped as Greenlight Capital hedge fund manager David Einhorn, who famously shorted Lehman stock, presented his negative view of the company at the Value Investing Conference in New York.

IBM (IBM, Fortune 500) will report its quarterly results after the market close.

World markets: European stocks finished lower. Britain’s FTSE 100 (UKX) slipped 0.7%, the DAX (DAX) in Germany lost 1.8% and France’s CAC 40 (CAC40) tumbled 1.6%.

Asian markets advanced. The Shanghai Composite (SHCOMP) added 0.4%, the Hang Seng (HSI) in Hong Kong surged 2% and Japan’s Nikkei (N225) ended 1.5% higher.

Currencies and commodities: The dollar rose against the euro and the British pound slipped slightly against the Japanese yen.

Oil for November delivery lost 42 cents to settle at $86.38 a barrel.

Gold futures for December delivery slipped $6.40 to settle at $1,676.60 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 2.16% from 2.23% late Friday.  To top of page

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