European stocks drop on renewed eurozone, growth worries

European stock markets fell sharply Tuesday on renewed concerns about the eurozone and global growth prospects owing to weak Chinese trade and US jobs data. London\'s benchmark FTSE 100 index dropped 2.24 percent to 5,595.55 points on the first trading day for Europe\'s leading market since last Thursday. In Frankfurt, the DAX 30 lost 2.49 percent to 6,606.43 points, and in Paris the CAC 40 fell 3.08 percent to 3,217.60 points. In Milan the FTSE Mib index dove 4.98 percent lower as bank shares plunged, and Madrid fell 2.96 percent after the government announced more spending cuts. In foreign exchange trade, the euro slid to $1.3070 from $1.3106 late in New York on Monday. \"European markets have not surprisingly plunged today as the hangover effects of the last weeks disappointing Non-Farm Payrolls was the initial trigger for the risk off sentiment,\" said Brenda Kelly at CMC Markets UK. The US Labor Department on Friday reported the US economy created only 120,000 jobs last month, while economists had been expecting upwards of 200,000 jobs to confirm that the recovery was finally becoming self-sustaining. The Dow fell 1.0 percent on Monday when US investors got their first chance to react to the disappointing March labor data, and dropped further in midday trading on Tuesday. \"However, the renewed concerns in respect of Spain and Italy\'s borrowing costs were the real catalysts for the sell off; with European banks enduring the worst of the negativity,\" added Kelly. After a period of respite at the beginning of the year when the European Central Bank pumped a trillion euros into the region\'s banks, the borrowing rates of most eurozone countries have begun to rise again. The rate of return on Spain\'s 10-year bonds rose to 5.940 percent on Tuesday on the secondary market, with the spread of over four percentage points with German bonds a sign of a flare up in investor concern. Spain\'s borrowing rate had dropped to around 4.0 percent earlier this year after hitting nearly 7.0 percent at the height of the crisis late last year. \"Today has been a tale of rising eurozone bond yields, and falling markets,\" said Rupert Osborne of IG Index in London. Spain on Monday unveiled 10 billion euros in additional savings after announcing last month 27 billion in its 2012 budget. However \"the strong fiscal tightening ... may stoke fears of a deeper recession and potentially a Greek-style downward spiral in Spain,\" warned economist Christian Schulz at Berenberg Bank. In Italy, bank shares were hit particularly hard on Tuesday, with Unicredit dropping 8.10 percent to 3.04 euros and Intesa Sanpaolo fell 7.94 percent to 1.137 euros. The yield on Italy\'s ten-year bonds rose to 5.620 percent from 5.447 percent on Thursday, with the spread from German bonds widening to nearly four percent. Prime Minister Mario Monti has run into strong opposition to a reform of Italy\'s labour laws which is considered key to boosting the country\'s competitiveness. The business daily Il Sole 24 Ore also reported that the government was set to slash its 2012 growth forecast. On Tuesday, Asian markets closed lower after the soft Chinese trade data added to an already sombre mood that had been generated by last week\'s worse-than-forecast US jobs figures. Tokyo closed down 0.09 percent, Seoul slipped 0.13 percent and Shanghai dropped 0.63 percent. China posted a trade surplus in March, reversing a massive deficit in February, but the figures showed that exports were still weak owing to economic woes in its major overseas markets -- principally, Europe. The country recorded a trade surplus of $5.35 billion in March, as exports rose 8.9 percent. However, imports rose just 5.3 percent, raising concerns about the state of the domestic economy. The Bank of Japan\'s decision not to unveil any fresh stimulus measures also depressed sentiment and pushed the yen higher, as the optimistic outlook at the start of the year waned. US stocks plunged as investors braced for the first-quarter earnings season, with the unofficial kickoff by Dow member Alcoa after the closing bell. The Dow Jones Industrial Average lost 1.19 percent to 12,775.65 points in midday trade. The broader S&P 500 fell 1.48 percent to 1,361.78 points, while the tech-rich Nasdaq gave up 1.63 percent to 2,997.40 points.