Europe stocks tumble on political fears, PMI data

Reuters Fran�ois Hollande, Socialist Party candidate for the 2012 French presidential election who won the first round of voting, arriving arrives at his campaign headquarters in Paris on April 23.

LONDON (MarketWatch)�European stock markets tumbled to a three-month low on Monday, driven by steep losses for banks and resource firms after weak purchasing-managers' index readings from China and Europe. At the same time, political tensions in France and the Netherlands fueled fears of further euro-zone turmoil.

The Stoxx Europe 600 index XX:SXXP sank 2.3% to settle at 251.75, its lowest closing level since mid-January. Wall Street stocks traded sharply lower, taking a cue from Europe.

French stocks wiped out yearly gains as the CAC 40 index FR:PX1 �dropped 2.8% to 3,098.37 following Sunday�s first-round presidential election. Socialist candidate Fran�ois Hollande topped President Nicolas Sarkozy in the first-round contest. The two candidates will face each other in a runoff election on May 6.

Click to Play Dutch government collapses

Dutch Prime Minister Mark Rutte and his cabinet have resigned after failing to reach agreement on reducing the country's budget to meet European guidelines. Charles Forelle reports on Markets Hub. Photo: Reuters.

There was also shock as far-right National Front candidate Marine Le Pen took third place. France�s Sarkozy, Hollande head for runoff

Hollande has said he�d seek to renegotiate the fiscal compact--designed to enshrine tougher budget cuts across the euro zone�if elected. Read politics, PMI amplify euro-zone debt fears

Credit Agricole SA FR:ACA lost 4.5%, BNP Paribas SA FR:BNP fell 4.1%, while Soci�t� G�n�rale SA FR:GLE dropped 3.9%.

Heavyweight oil group Total SA FR:FP declined 2.4% on the back of a drop in oil prices.

Underperforming all other major country-specific indexes, Germany�s DAX 30 index DX:DAX tumbled 3.4% to 6,523.00. A preliminary reading of the country�s manufacturing PMI showed business activity contracted at the fastest level since 2009, according to Markit.

A broader measure, which weighed on markets overall in Europe, showed business activity in the euro zone contracted at a faster-than-expected pace in April. Euro-zone April composite PMI falls to 5-month low

Car makers fell sharply in Germany. BMW AGDE:BMW fell 4.1% after sales chief Ian Robertson said at a press briefing in Beijing that sales growth in China will ease in coming months, according to Bloomberg News. Daimler AG DE:DAI slid 4.2%.

BASF SE DE:BAS was off 3.8%. Chief Executive Kurt Bock said in an interview with the Financial Times that the company�s global competitiveness would be at risk if the European Union changes the emissions trading scheme, as signaled by some member states.

Financials also fell sharply. Commerzbank AG DE:CBK sank 5.6%, while insurer Allianz SE DE:ALV shed 2.8%. Deutsche Bank AG DE:DBK �dropped 4.4% following a Bloomberg News report that it may book an additional charge of �400 million related to the sale of Actavis Group. A spokesperson from Deutsche Bank was not immediately available to comment.

Dutch troubles roil markets

Political concerns also hovered over the Netherlands, where budget talks aimed at meeting European Union rules collapsed over the weekend, prompting fears the country may lose its triple A rating. Dutch Prime Minister Mark Rutte and his cabinet resigned Monday, according to media reports. Dutch prime minister, cabinet resign