European stocks drop, kick off May on dour note

European stocks tumbled on Monday as investors returned from a May Day break to a fresh spat between the United States and China over the coronavirus crisis that triggered losses in cyclical sectors.

The pan-European STOXX 600 fell 2.5 per cent in a downbeat start to May after the index recorded a 6 per cent gain in April.

Oil & gas, automakers, banking and technology indexes were the biggest drags on the index, falling between 3.6 per cent and 5 per cent.

Germany's Thyssenkrupp slumped 13 per cent after a report that the pandemic could cause a new financial squeeze despite the sale of its elevator business.

Adding to US president Donald Trump's threat last week to impose tariffs on China, Secretary of State Mike Pompeo said on Sunday there was "a significant amount of evidence" that the new coronavirus emerged from a Chinese laboratory.

Germany's DAX fell 3.3 per cent, with additional pressure from chipmaker Dialog Semiconductor after it withdrew 2020 outlook. France's CAC 40 dropped 3.8 per cent.