LONDON: Global stock markets slumped Friday on the first day of the second quarter, with investors rattled over new economic concerns in Japan before vital US data, dealers said.
Tokyo fared the worst, spearheading losses across most of Asia as a key survey showed confidence at Japan's manufacturers slumped to a three-year low.
Around 1100 GMT, Frankfurt and Paris stock markets were down around 2.0 percent before the looming US jobs data, which provides a vital snapshot of the world's biggest economy and clues on the path of Federal Reserve interest rates.
After a painful sell-off in January and February, world markets had enjoyed a healthy rally in March as many central banks loosened the monetary belt to make borrowing easier.
Stocks soared Wednesday after Federal Reserve chief Janet Yellen indicated that the US central bank was unlikely to raise interest rates in the first half of this year, citing ongoing concerns about the slow global economic growth.
However, investor sentiment turned negative Thursday on lower commodity prices at the end of a volatile first quarter, as the Fed-driven rally fizzled out.
- 'Hesitant start' to Q2 -
"Equity markets are having a hesitant start to the second quarter despite Janet Yellen's dovish speech this week," VTB Capital economist Neil MacKinnon told AFP.
"A disappointing business survey in Japan is weighing on sentiment as investors wait for details of today's US jobs report."
The Bank of Japan's quarterly Tankan report of 10,000 firms showed sentiment plunged in January-March to plus six from 12. The survey marks the difference between the percentage of firms that are upbeat and those that see conditions as unfavourable. Forecasts had been for a reading of plus eight.
The figures are the worst since Prime Minister Shinzo Abe put his growth drive fully into action in 2013 and will ramp up pressure on him as the economy struggles to gain traction.
Analysts also said the figures will likely push the central bank to unveil another round of monetary easing measures, on top of the huge bond-buying scheme already under way and after an unprecedented move to negative interest rates.
Tokyo's Nikkei index dived 3.6 percent, with a stronger yen also hitting exporters.
There were sharp losses across Asia, with Hong Kong down 1.3 percent and Sydney 1.6 percent lower at the close. Seoul, Singapore and Wellington were also heavily sold off.
However, Shanghai ended the day with a 0.2-percent gain thanks to end-of-day buying ahead of a long holiday weekend.
A surprise jump in a gauge of Chinese manufacturing helped Shanghai post a slender gain although investors were jolted by news that Standard & Poor's had lowered its credit rating outlook on China to negative.
- Caution before data -
Wall Street diverged Thursday ahead of Friday's US Labor Department non-farm payrolls report, which analysts expect will show the economy added 200,000 jobs in March.
"We typically see a more cautious approach in the lead up to major economic events and today's US jobs report is one of them as it has the potential to influence the Fed's policy decision, albeit not this month's when a hike appears to be off the table," said analyst Craig Erlam at traders Oanda.
Oil prices fell as ongoing worries about the global supply glut overshadowed the benefits of a weakening dollar.
London - FTSE 100: DOWN 1.2 percent at 6,099.10 points
Frankfurt - DAX 30: DOWN 2.0 percent at 9,766.90
Paris - CAC 40: DOWN 2.1 percent at 4,294
EURO STOXX 50: DOWN 2.0 percent at 2,943.60
Tokyo - Nikkei 225: DOWN 3.6 percent at 16,164.16 (close)
Shanghai - Composite: UP 0.2 percent at 3,009.53 (close)
Hong Kong - Hang Seng: DOWN 1.3 percent at 20,498.92 (close)
New York - Dow: DOWN 0.2 percent at 17,685.09 (close)
Euro/dollar: UP at $1.1395 from $1.1377 on Thursday
Dollar/yen: DOWN at 112.33 yen from 112.60 yen
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