European stocks tumble on slowdown and debt worries

London's benchmark FTSE 100 index of top companies finished down 1.03 percent at 5,651.79 points, while Frankfurt's DAX dropped 2.36 percent to 6,583.90 points and Paris' CAC 40 fell 2.47 percent to 3,189.09 points.

Milan's FTSE Mib index dove 3.43 percent to 14,359 points and Madrid shed 3.58 percent to 7,250.6 points.

In foreign exchange deals, the euro declined to $1.3081 from $1.3188 late in New York on Thursday.

"European indices are weaker ... with Spanish and Italian markets coming under the greatest selling pressure," commented analyst David Morrison at the trading group GFT.

"Sovereign bond yields for both countries are higher, and the euro has so far failed to break back above 1.32 against the US dollar."

He added: "Investors were rattled by the news that Spanish bank borrowing from the European Central Bank rose dramatically last month."

Borrowing by Spanish banks from the ECB hit a new record in March at 227.6 billion euros as they snapped up emergency cheap loans, official data showed.

The figures from Spain's central bank are a sign of weak confidence in Spain's troubled financial sector, with commercial banks turning to the ECB because they are struggling to borrow on interbank lending markets.

Spanish banks have found it hard to borrow money from peers in other eurozone countries because many in Spain are heavily exposed to the real-estate sector, which has been in a slump since a bubble burst in 2008.

Italy and Spain remain in the market spotlight amid fears that the pair could be sunk by the long-running eurozone debt crisis, which has already resulted in vast EU/IMF bailouts for Greece, Ireland and Portugal.

The yield on Spanish 10-year bonds jumped to 5.956 percent from 5.802 percent on Thursday, once again nearing the critical six percent threshold which many economists consider unsustainable.

The yield on Italian 10-year bonds rose to 5.513 percent from 5.394 percent.

Asian markets mostly rose Friday, after a strong rally on Wall Street on Thursday, as dealers shrugged off news that China's economy grew at its slowest pace in almost three years in the first quarter of this year.

Asian investors took their cue from a Wall Street surge on Thursday that was driven by hopes the Federal Reserve will introduce fresh stimulus measures after a second straight week of rising jobs claims.

The mood was also lifted by news that a North Korean rocket launch, which had raised regional security tensions, had failed.

Hong Kong added 1.84 percent, Shanghai won 0.35 percent and Tokyo rose 1.19 percent, while Sydney gained 0.99 percent.

However, the Chinese gross domestic product data has cast a cloud over European markets as well as Wall Street.

China's keenly-awaited GDP data showed that the Asian powerhouse economy grew just 8.1 percent in the first three months of the year, the weakest since the second quarter of 2009.

The export-driven economy as hurt by the ongoing troubles in its key European and US markets, while demand at home was also weak.

"China's growth grinding lower as export and domestic demand cool down has dampened the market sentiment in today's European session," said Anita Paluch at Gekko Global Markets.

She added: "The weakness of the world's second largest economy is compounding the fears and problems the eurozone is facing at the moment."

Friday's figures follow a string of bad results from Beijing that many analysts fear point to a sharp slowdown, which could have huge knock-on effects for other economies that rely on Chinese growth.

A 0.5 percent drop in the University of Michigan's consumer sentiment index also stoked concerns about the pace of the US recovery following poor jobs figures.

US traders took their cue from slower growth in China rather than better-than-expected earnings from two big banks and Internet giant Google.

In midday trading the Dow Jones industrial average was down 0.52 percent at 12,919.22 points. The broader S&P 500 index had shed 0.70 percent to 1,377.92 points, and the tech-heavy NASDAQ fell 0.94 percent to 3,026.90 points.