European markets have paused for breath in early trading after yesterday's heavy sell off, as contagion fears in the eurozone resurfaced.
Spanish 10-year bond yields touched 6%, leading the FTSE 100 to slump to its lowest level of the year, posting losses of 128 points to finish at 5,596.
The yield on Italian 10-year bonds also spooked markets, climbing to 5.7%, while Italy's FTSE MIB index closed more than 5% lower.
However, at 8.45am Spanish and Italian yields pushed lower, declining to 5.91% and 5.65% respectively, giving European markets a much needed breather.
The FTSE 100 has opened trading up 0.32% or 18 points to 5,614, but has almost undone all its gains since the start of the year as fears over the eurozone debt crisis re-emerged.
The German Dax is also in the black, gaining 0.64% to 6,648, while the French Cac is up 0.35% to 3,228.
Markets are concerned Spain could be the next eurozone nation to need a bailout, as both Italy and Spain look to implement tough austerity measures which will hamper growth.
German bond yields dipped below those of Japan for the first time ever as investors considered the likelihood of another round of stimulus in Europe.
The payout on two-year bunds fell to 0.109%, below that of even Japan which yields 0.111% on its two-year note.
Investors are worried the recovery in the US employment market is running out of steam, as US non-farm payrolls data for March disappointed.
The US generated 120,000 jobs (seasonally adjusted) in March, well below the 200,000 expected by the market. Private sector payrolls rose by 121,000 while government payrolls were more or less unchanged.
The unemployment rate dipped to 8.2% from 8.3% in February, but the decline was entirely down to people taking themselves out of the recruitment market.
US markets slumped overnight, with the Dow falling 1.65% to 12,716 and the S&P 500 down 1.71% to 1,359.
China's trade balance came in at a surplus of $5.35bn in March, compared with a deficit of $31.48bn the month before, as exports grew by 8.9% year-on-year (consensus: +7%).
However, imports increased by 5.3% (consensus: +9%), down from the near-40% jump in February, spreading fears of a slowdown in domestic demand.
Asian markets also ended the session lower, with the Nikkei 225 down 0.83% to 9,459 and the Hang Seng losing 1.23% to close at 20,106.
Additional reporting by ShareCast
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