File photo: Agencies

European equity markets rebounded Friday as investors snapped up bargains after the previous day's rout on fears over the coronavirus economic fallout and the likelihood of a second wave of the pandemic in the United States.

The magnitude of the earthquake caused by the COVID-19 outbreak was brought home by official data showing the British economy shrank 20.4 percent month-on-month in April.

Markets also looked beyond data showing that eurozone industrial production plummeted 17.1 percent in April, with factories hit hard by coronavirus lockdowns.

After sharp losses overnight on Wall Street, Asia fell sharply but then steadied somewhat before Europe reversed early losses on Friday to post gains of 1.5 percent in London and Frankfurt while Paris jumped 2.5 percent.

"As if it was not already clear that we are living through extraordinary times, investors are piling back into stock on Friday after a sharp sell-off a day earlier," said analyst Craig Erlam at trading group OANDA.

"While yesterday's 6.9-percent plunge in the Dow is not even in the top three worst days this year, it is still a quite remarkable daily drop historically.

"Today's rebound may not last... but these markets are very strange and I wouldn't be surprised if it's instead being perceived as a 'buy the dip' opportunity."

Europe's indices had tumbled Thursday on growing virus concerns, with Frankfurt down 4.5 percent, London losing 4.0 percent and Paris sinking 4.7 percent.

Global equities dived as investors worried about a second US virus wave and after the US Federal Reserve warned of a "highly uncertain" economic outlook because of the pandemic.

Stocks have blasted higher since hitting a deep trough three months ago, supported by trillions of dollars in government and central bank funding and an easing of lockdown measures.

But the optimism on trading floors was shattered Wednesday when Fed boss Jerome Powell signalled the world's top economy would take some time to bounce back from the crisis.

While his comments, and the bank's decision to keep interest rates at near zero for at least two years, was as expected, the dose of reality jolted traders.

That coincided with figures showing a spike in new infections in key states including Texas, California, Arizona and Florida, which fanned concerns of a new wave as the nation slowly reopens.

Asian markets fell further, but losses were shallower than earlier in the day and much lighter than on Wall Street on Thursday, where all three main indexes were routed.

Analysts also blamed profit-taking after the huge run-up since March, which has seen some indices rise more than 50 percent, with many saying investors had run ahead of themselves on hopes for a V-shaped recovery.

Thursday's equities retreat was reflected in oil markets, with both main contracts tumbling more than eight percent on uncertainty over energy demand and data showing a jump in US stockpiles.

Crude however staged a slight rebound on Friday.