(Bloomberg) -- European stocks tumbled into a correction on Friday as China retaliated against US tariffs, escalating the global trade war.

The Stoxx Europe 600 Index slid 5.1% at the close in London, recording its worst weekly drop since the outbreak of the Covid-19 pandemic five years ago. Indexes in Italy, France, Switzerland and Germany were also in correction territory after news that Beijing would impose a 34% tariff on all imports from the US, starting April 10.

Banks were the biggest laggards, with the Stoxx 600 Banks Index sinking as much as 10%. Italy’s FTSE MIB Index — weighed down by the weakness in banking stocks — led losses among major European benchmarks with a 6.5% slide.

“Every portfolio has to adjust themselves for a recession in a lot of countries,” said David Kruk, head of trading at La Financiere de L’Echiquier. “Yesterday, the US bore the brunt of the selloff. Now it’s our turn.”

Still, data showing better-than-expected US job growth in March was somewhat reassuring, according to Amelie Derambure, senior multi-asset portfolio manager at Amundi SA.

“If the data had been really bad, it would have led to the conclusion that the Trump administration and the uncertainty around its policies were already triggering a recession,” said Derambure.

Traders had earlier boosted their expectations for the US Federal Reserve to cut interest rates this year.

Among individual stock movers, Gerresheimer AG fell 15% after Bloomberg News reported KKR & Co. has walked away from a consortium discussing a takeover of the German maker of drug packaging.

Here is what market participants are saying:

Max Kettner, HSBC chief multi-asset strategist:

“We don’t think the correction is over yet. In fact our measures of sentiment and positioning are still ambiguous at best. Our momentum signals indicate that typical trend-following strategies are still only medium short, and equity exposure on our measure of long-only investors has barely budged so far. Equity market breadth in the S&P500 is nowhere near capitulation levels yet, and in fact is even still much higher than during the rates-driven dip in January. The average stock has actually been flat YTD until yesterday, so we do think there’s quite a bit more pain to come until the Fed put can step in”

Vincent Juvyns, global market strategist at JPMorgan Asset Management:

“Let me be clear, in no way is this capitulation, it’s a slap in the face but this is not capitulation. Indeed you can see that it’s the best performing stocks and indexes that are falling the most, like banks, because that’s where investors can take their profits. But let me be clear and I say that with conviction: for a long term investors, this selloff creates a lot of buying opportunities. The selloff is overdone in my opinion. Yes there’s going to be macro-economic consequences to the tariffs but my point is that for diversified investors, bonds are perfectly doing their job in cushioning the fall in equities”

Neil Birrell, chief investment officer at Premier Miton Investors:

“The bifurcation you’re getting within different markets is extraordinary. Within equities, it’s get out of anything that’s rate-sensitives, get into safety”

Aneeka Gupta, head of macroeconomic research at Wisdom Tree UK Ltd:

“It’s unprecedented to see this in the second day in a row. China’s response is predominantly setting the stage. The likelihood now is that if with China leading the way, we’re likely to get more countermeasures being put in place by other economies. Right now for market, you could compare it with catching a falling knife. It’s quite a difficult situation”

Janet Mui, head of market analysis at RBC Brewin Dolphin:

“I think people are fleeing for safety now because the situation appears to be spiraling downward. It is hard to see a scenario where most of the tariffs will be rolled back in the near term. The sentiment shock is going to inflict a lot of harm for both the U.S. and elsewhere”

Raphael Thuin, head of capital markets strategies at Tikehau Capital:

“Today we’ve entered an escalation phase with countries starting to retaliate and it’s not possible to know how this will end. We must get used to the idea that this a regime change: growth expectations will be cut down and inflation forecast revised upwards. Even if one ignores for a minute the immediate market action, long term, the horizon has darkened. What’s also worrying is that central banks won’t be in a position to weigh in that much given that this new cycle is an inflationary one”

Susana Cruz, Panmure Liberum strategist:

“It looks like investors are playing it safe, with the announcement of Chinese retaliations adding to the already growing recession risks. They seem to be bracing for more bad news, as sectors with strong momentum before the tariffs, like European banks and industrials, face a deeper selloff. Quality stocks and low volatility are providing some shelter amid the storm.”

For more on equity markets:

--With assistance from Sagarika Jaisinghani, Allegra Catelli, Levin Stamm and Paul Jarvis.