Italian government bonds also sold off sharply, sending yields up to 3.1%, up from 1.8% on May 1, and raising the borrowing costs of the indebted government.
German unemployment dropped to a super-low 3.4 percent in April, with the Netherlands at 3.9 percent. It was set for a third week of losses, however, brought on by the risks of a snap election in Italy.
The euro has slumped this week to its lowest in 10-months, at around US$1.15, after an attempt by two Italian parties to form a government collapsed, fanning fears of a fresh election that could become a de facto referendum on Italy's membership of the euro zone. The new government was being installed on Friday.
The Milan stock index was down almost 3 percent, weighing particularly hard on banks, and Italian bonds suffered a plunge reminiscent of the worst days of the financial crisis of 2011. Spain's Ibex was down 2.2% ahead of a likely confidence vote on prime minister Mariano Rajoy on Friday.
"Italy will be wrapped in a long drawn-out period of wrangling that will feature intense anti-establishment and euroskeptic tones", said political analyst Wolfango Piccoli. It had hit a 10-month low of $1.1510 on Tuesday.
Futures showed US stocks were set to open higher. Responding to media reports regarding the regulatory ratings of its US entities, the German lender said that it is highly focused on addressing identified weaknesses in its USA operations.
All of those companies get about half their revenue from outside the US, while nearly two-thirds of Abbott's sales come from overseas.
Europe's populists cheered, with French far-right leader Marine Le Pen, who shares the League's firm anti-immigrant stance, tweeting: "It's a victory of democracy over intimidation and threats from the European Union". Many of the South Asian markets were closed for trading on Tuesday due to holidays. The MSCI Asia Pacific Index fell after news leaked that Apple may be shifting to next-gen technology for its iPhone screens.
"Becoming more positive for the investment case remains hard due to the uncertainty related to the company's Apple business", analysts at Baader Helvea said in a note. Australia's S&P/ASX 200 fell 0.6 percent to 5,999.90.
Traders said Chinese stocks were volatile as the long-awaited inclusion of large-cap shares from the country in MSCI's emerging markets index had failed to buoy the market or attract immediate flows of foreign money.
Milan's stock market was higher Friday after the deal was reached late Thursday. Japan's Nikkei rose 0.1 percent. Both currencies fell on Thursday after the US decision to impose tariffs.
The New Zealand dollar fell below 69 U.S. cents and dropped against the yen as Italy's political hiatus sent Italian bond yields soaring and prompted investors to look for safe havens.
The dollar index against a basket of six major currencies was down 0.3 percent on the day at 93.833. The dollar slipped and oil rose.
Swedish radiation therapy equipment maker Elekta dropped 1.3 percent after its Q4 adjusted operating profit came in below analyst estimates.
ENERGY: U.S. crude oil climbed 43 cents to $67.16 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price global oils, added 71 cent to $76.20 a barrel in London.