Europe close: Stocks pummeled as investors rein in their bullishness

European shares slid from the record highs hit just the day before with most market commentary blaming rising numbers of Covid-19 infections around the world for the big drops.

"Traders appear to be caught between the optimism of a gradual reopening at home and pessimism over the growth in more worrying strains around the world," said IG senior market analyst Josh Mahony.

"Despite a rise in vaccinations throughout Europe and the US, those nations are relative outliers rather than the norm. With just 6% of the world having received a vaccine dose, the risk of further mutations remains too high to ignore."

The pan-European Stoxx 600 index was down 1.9% to 433.8, nevertheless had been hitting records throughout April and was up 10.4% year-to-date.

Sector-wise, the Stoxx 600 Travel&Leisure sub-index fell 3.69%, alongside a 3.67% decline for another sub-index tracking lenders' shares.

Germany's Dax finished off by 1.55% to 15,129.51, while Spain's Ibex 35 gave back 2.89% to close at 8,459.4.

British American Tobacco and Imperial Brands were both down more than 7% after a report in the Wall Street Journal said the Biden administration was thinking about forcing tobacco companies to lower nicotine levels. A deadline for declaring a ban on menthol cigarettes was also reportedly looming.

The UK FTSE 100 was down 2.0% at 6,859.87.

UK job figures for the three months to February showed the unemployment rate fell to 4.9%, better than the 5% forecast by analysts. However investor sentiment was dampened by data showing an unexpected 56,000 drop in UK payrolls for March - the first decline in four months.

“Though on the surface the numbers look broadly positive, the knowledge that furlough is acting as the final line of defence against a potential jobs disaster appears to have undermined faith in this morning’s figures,” said Spreadex analyst Connor Campbell.

Investors were also waiting on the release of key corporate results in the US due out after the market close in New York, including from media giant Netflix.

In other equity news, shares in French food group Danone fell 2% despite the company maintained guidance for returning to profitable growth in the second half of 2021.

Swedish medical gear maker Getinge added roughly 1% after it posted a rise in first-quarter core profit.

Shares in cybersecurity firm Avast gained a similar amount as the company raised guidance for the year after posting an increase in first quarter profits.

The company confirmed revenue of $237m during the period, up 10% year on year, while core earnings were up 10.3% to $134m.

Shopping centre owner Hammerson retreated as the company has revealed less than half of its second quarter rent due has been collected despite retail restrictions easing in England and a subsequent rebound in footfall.

The group, whose property portfolio includes the Birmingham Bullring and Bicester Village, said it had received 48% of second quarter rent due in the UK as market conditions remained “challenging”. Across the wider group, rent received stood at 40%, with £27m still outstanding.