Europe, Tokyo stocks slump

European stock markets slumped on Thursday, taking their lead from Tokyo which fell heavily as the Bank of Japan shocked traders by deciding against fresh stimulus measures.

The surprise move by the BoJ came after the Federal Reserve provided a positive outlook on the global economy, highlighting mixed signals from the world's leading central banks.

Wall Street had finished mostly higher on Wednesday after the Fed suggested that it was less worried about international economic and market problems than in March, as the US central bank kept interest rates unchanged.

Around 1015 GMT on Thursday, London's benchmark FTSE 100 index was down 1.1 percent compared with Wednesday's closing level.

In the eurozone, Frankfurt's DAX 30 index shed 1.3 percent and the Paris CAC 40 retreated by 1.4 percent in value. Madrid's IBEX 35 index tumbled 2.3 percent.

The eurozone "was dealt another inflation blow as Spain?s latest CPI (inflation) reading came in at far worse than expected", said Connor Campbell, analyst at Spreadex trading group.

"On top of that its unemployment rate ticked up to 21 percent, painting a sorry picture of the country?s economy ahead of Spain?s second general election" in June.

- Tokyo meltdown -

Tokyo's Nikkei index plunged more than 3.5 percent on Thursday as the Bank of Japan shocked markets by holding fire on a fresh round of widely expected stimulus measures, sparking questions about whether it had anything left in its arsenal to kickstart the stuttering Japanese economy.

"Both foreign exchange and equity markets have given the Bank of Japan?s unchanged policy decision the thumbs down, with the yen rising as much as 2.0 percent against the US dollar," said Jeremy Cook, chief economist at foreign exchange group World First.

Traders had widely expected the BoJ to unveil fresh measures to shore up the world's number three economy after this month's deadly earthquakes in southern Japan and a string of weak data.

"It?s a total shock," said Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors.

"From currencies to equities to everything -- you can see the reaction in the markets. I can't believe this. It's very disappointing."

Weak data on Thursday -- including the biggest fall in Japanese consumer prices for three years -- reinforced the struggle authorities have in kick-starting growth and igniting inflation in the country.

Meanwhile after a much-anticipated policy meeting in the United States, the Fed on Wednesday decided against hiking interest rates and stood by its stance that any further rises would be slow and small as economic growth remained relatively weak.

However, its post-meeting statement suggested it was less concerned about the global economic outlook than it was at the start of the year when it cited turmoil in world markets for lowering its forecasts for rate hikes in 2016.

While analysts argued over what the Fed's comments meant for the timing of its next rate rise, investors welcomed the prospect that they will stay low well into the second half of the year.

On Wall Street, the Dow and S&P 500 indices climbed, although the tech-rich Nasdaq was dragged down by weak earnings from Apple and Twitter, traders said.

- Key figures around 1015 GMT -

London - FTSE 100: DOWN 1.1 percent to 6,251.72

Frankfurt - DAX 30: DOWN 1.3 percent at 10,165.99 (close)

Paris - CAC 40: DOWN 1.4 percent at 4,494.63 (close)

EURO STOXX 50: DOWN 1.7 percent at 3,077.79

Tokyo - Nikkei 225: DOWN 3.6 percent at 16,666.05 (close)

Dollar/yen: DOWN at 108.15 yen from 111.47 yen

Shanghai - Composite: DOWN 0.3 percent at 2,945.59 (close)

Hong Kong - Hang Seng: UP 0.1 percent at 21,388.03 (close)

New York - Dow: UP 0.3 percent at 18,041.55 (close)

Euro/dollar: UP at $1.1357 from $1.1321 Wednesday

Dollar/yen: DOWN at 108.16 yen from 111.47 yen