LONDON: European stocks slumped Friday on the first day of the second quarter as falling oil prices, new economic concerns in Japan and a solid US jobs data hurt sentiment.
Tokyo spearheaded losses across most of Asia as a key survey showed confidence at Japan's manufacturers slumped to a three-year low, and set a downbeat tone for the start of trading.
Meanwhile energy stocks suffered as oil prices took a beating following comments by Saudi Arabia's deputy crown prince to Bloomberg News that dashed hopes for an agreement later this month to limit production.
Then data was released showing that the US economy added 215,000 jobs in March, slightly more than the 200,000 projected by analysts.
While the data was a reassuring snapshot of the strength of the recovery in the world's biggest economy, it renewed questions among investors about the path of US Federal Reserve interest rates hikes.
"A better than expected jobs report lifted hopes of an acceleration in the US economy but also made June back into a 'live' meeting for the Federal Reserve and a possible rate hike," said CMC Markets analyst Jasper Lawler.
Stocks had soared Wednesday after Fed 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.
Analyst Alexandre Baradez at IG France said the markets' "first reaction was defensive", fearing the good jobs results would encourage the Fed to move faster with rate hikes after all.
Interest rate hikes are generally negative for stocks.
However once investors spent more time looking at the jobs data and decided that it will unlikely shift Yellen from her dovish stance, stocks began to recover from their intraday lows.
Frankfurt and Paris stock markets still ended down over one percent, while London slid 0.5 percent.
While initially falling, US stocks had turned positive by midday with the Dow Jones Industrial Average climbing 0.3 percent.
The dollar also picked up ground against the euro.
- Japan sentiment plunges -
Meanwhile a disappointing business survey hit markets.
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.
- Key figures around 1730 GMT -
London - FTSE 100: DOWN 0.5 percent at 6,146.05 points (close)
Frankfurt - DAX 30: DOWN 1.7 percent at 9,794.64 (close)
Paris - CAC 40: DOWN 1.4 percent at 4,322.24 (close)
EURO STOXX 50: DOWN 0.7 percent at 2,984.36
New York - Dow: UP 0.3 percent at 17,738.72
New York - S&P 500: UP 0.07 percent at 2,061.18
New York - Nasdaq: UP 0.5 percent at 4,895.92
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)
Euro/dollar: DOWN at $1.1367 from $1.1377 on Thursday
Dollar/yen: DOWN at 112.25 yen from 112.60 yen
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