Shares in Europe's biggest companies fell on Tuesday, reacting to poor U.S. jobs numbers released over the holiday weekend and resurgent concerns about the euro zone's debt crisis ahead of the U.S. corporate earnings season.
At 1053 GMT the FTSEurofirst 300 index was down 11.81 points, or 1.1 percent, at 1,040.43 after reopening for the first time since Friday's March U.S. payrolls numbers.
The Euro STOXX 50 fell 1.2 percent to 2,363.15 to threaten a key support level around 2,352 -- the 61.8 percent Fibonacci retracement of a rally that began in mid-December.
The Euro STOXX 50 volatility index, Europe's main barometer of anxiety, surged 12 percent to a five-week high.
According to its 14-day relative strength index, the Euro STOXX 50 has slipped into oversold territory that could provide support along with the trend line that started in September.
Miners fell in tandem with commodity prices and automakers were lower too on signs of flagging growth in the U.S. and waning demand in China and other economies.
Payrolls data released on Friday added to a run of U.S. indicators that has taken the edge off the first quarter's brisk stock rally, while China's imports grew less than expected in March, highlighting concerns about the pace of a slowdown in domestic demand.
In Europe, Swedish industrial production suffered its sharpest fall since 2009, France's economy posted no growth in the first quarter and euro zone investor sentiment dropped in April after three consecutive increases, adding to the bleak sentiment.
There's nothing particularly startling but the numbers are consistent with an economy that at best is moving sideways ... there's not much momentum in this data at all, said Peter Dixon, economist at Commerzbank.
Italian carmaker Fiat shed 3.7 percent after Brazil, a key market, said it had no plans to offer further incentives for automakers, according to reports.
Building supplies merchants such as France's Lafarge and London-listed Wolseley fell as much as 2.9 percent as the outlook for demand weakened, while investors eyeing a potential dip in the employment market sold Adecco , down 3.4 percent.
Company earnings will be closely watched over the coming months for evidence of how the bank lending squeeze and subsequent slowing growth is impacting profit margins.
That makes the U.S. reporting season that begins with Alcoa after this evening's closing bell of even greater interest than usual to investors.
Against the backdrop of waning global demand and European debt worries, analysts do not expect the results season to provide much cheer for investors.
JPMorgan said it is staying cautious in the near term on equities due to the loss of macro momentum.
The first-quarter reporting season is seen by many as a potential catalyst for improving market sentiment. We disagree, said Mislav Matejka, equity strategist at JPMorgan.
Banks remain of great concern with both the U.S. Federal Reserve Chairman Ben Bernanke and the governor of the Bank of Spain saying lenders may need more capital to ensure the financial system is stable as economic conditions deteriorate.
Commerzbank's Dixon said banks will most likely choose to shrink their balance sheets further in order to meet capital requirements given how difficult it is to raise capital on markets, which is effectively disinflationary because banks will cease to expand their businesses further pressuring profits.
The sector, which led the market higher at the start of 2012, has succumbed to profit taking as the positive effects of a liquidity boost provided by global central banks at the end of 2011 has begun to wear off and investors have refocused on Europe's long-term debt problems.
Spanish debt yields continued to rise as the euro zone periphery struggles to meet deficit reduction targets, and Italian yields did likewise after the country's banks borrowed heavily from the European Central Bank in March
The global asset allocation team at Societe Generale said investors should stay away from eurozone peripheral markets for the time being.
In Italy and Spain, the consensus expects respectively +10 percent and -9 percent growth in earnings per share which seems too optimistic to us in view of the daunting challenges facing the two countries, Societe Generale said.
Bucking the weaker trend, Randgold Resources rallied 9.9 percent on hopes of a settlement in Mali - home to two thirds of the miner's production - following the resignation of the president and after the gold miner confirmed its production target for the year.
It has said that disruptions caused by a military coup in the country had not significantly affected its operations there.
While the effects of the coup are clearly a factor, the 22 percent markdown in the shares from the prior peak is totally unwarranted, analysts at Prime Markets said.
The broker said provided Rangold shares can deliver an end of week close back above the falling 20-day level at 5,980p, it expects a retest of the benchmark rising 200-day moving average currently at 6,558 pence in the coming 2-4 weeks.