The European markets fell for the first time in four days on Friday after a government report showed that U.S. unemployment rate climbed to a 25-year high last month.

The U.S. Labor Department said in its report that non-farm payroll employment fell by 663,000 jobs in March following an unrevised decrease of 651,000 jobs in February. The drop in jobs came roughly in line with economists' expectations of a decrease of 658,000 levels.

With the continued decrease in jobs, the unemployment rate rose to 8.5% in March from 8.1% in February, in line with expectations. The increase lifted the unemployment rate to its highest level since November of 1983.

The Institute for Supply Management said today its non-manufacturing index fell to 40.8 in March from 41.6 in February, with a reading below 50 indicating a contraction in the service sector. The decrease came as a surprise to economists, who had expected the index to edge up to 42.0.

Crude for May delivery fell $0.53 to $52.36 barrel on the New York Mercantile Exchange with US employment numbers suggesting demand for energy is not strong.

The FTSEurofirst 300 index of pan-European blue chips closed 1.26% lower at 771.60 points, while the narrower DJ Stoxx 50 index fell 1.69% to 1,895.75 points.

Around Europe, the U.K.'s FTSE 100 index dropped 2.31% to 4,029.67 and France's CAC 40 index slipped 1.11% to 2,958.74, while Germany's DAX index rose 0.07% to 4,384.99.

Banking stocks were among the worst losers. HSBC, Europe's largest bank, dropped 5.3%, while Credit Suisse, Switzerland's second largest bank, slipped 5.2% and Deutsche Bank, Germany's biggest lender, fell 1.8%.

Heavily weighted oil stocks slipped after crude oil prices fell. BP, Europe's biggest oil company, dropped 3.2%, while Royal/Dutch Shell, the second biggest, fell 2.8% and Total, the third biggest, slid 3.1%.

Novo Nordisk, the world's biggest insulin maker, tumbled 13.7% after a U.S. FDA advisory panel failed to back its experimental diabetes drug Victoza, or liraglutide, with votes split on whether it was safe enough to come to the market due to worries over cancer.

Tesco, Europe's second biggest retailer, lost 4.6% after JPMorgan Chase cut its earnings estimates for the company, citing declining profitability and a possible full-year loss in the U.S.

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