UPDATE 3-European stocks kick off May on dour note, ThyssenKrupp leads losses

* ThyssenKrupp sees cash squeeze, bottoms out STOXX 600
* U.S., China spat over virus keeps investors on edge
* Euro zone manufacturing collapses in April as virus
spreads -PMI
* Oil and gas, automakers fall most among regional sectors

(Updates to close)
By Sruthi Shankar and Ambar Warrick
May 4 (Reuters) - European stocks ended lower on Monday as
investors were greeted with fresh Sino-U.S. tensions following a
May Day break, after Washington threatened tariffs against China
over the coronavirus.
The pan-European STOXX 600 .STOXX closed 2.7% lower in a
downbeat start to the month, having risen 6% in April on hopes
of major economies re-emerging from virus-related lockdowns.
Euro zone shares .STOXXE were down 3.8%.
Sectors sensitive to economic growth, including oil and gas
.SXEP , automakers .SXAP and banking .SX7P , were
particularly rattled by the possibility of a fresh trade spat
between the world's two largest economies.
U.S. Secretary of State Mike Pompeo said on Sunday there was
"a significant amount of evidence" that the virus emerged from a
Chinese laboratory, adding to concerns over threats of new U.S.
tariffs on China in retaliation for the outbreak.
China's Global Times said in an editorial that Pompeo was
"bluffing".
European oil and gas stocks were among the worst performers
for the day, tracking a tumble in oil prices. The sector was
already on shaky footing after a crash in crude prices last
month. O/R
"Sentiment continues to be dented by geopolitics as the
blame game ramps up," Mark Taylor, a sales trader at Mirabaud
Securities, wrote in a note.
"There has also been an air of optimism running ahead of
itself despite continued reopening of various economies and
Gilead's positive drug news."
Germany's ThyssenKrupp TKAG.DE plunged 14% to the bottom
of the STOXX 600 after its management board told staff in a
letter that the pandemic could cause a new financial squeeze
despite the sale of its elevator business. European stocks had fallen from near two-month highs last
week after dismal first-quarter GDP data, while the European
Central Bank held off on further major policy moves to support
the economy.
"An ‘unprecedented' fall in real output last quarter will be
followed by much sharper declines this quarter and only a modest
recovery thereafter," wrote Shweta Singh, Managing Director,
Global Macro at TS Lombard, adding that the ECB would have to do
more.
Data also showed that euro zone manufacturing activity
collapsed through April, due to the virus. Meanwhile, J.P.Morgan's equity analysts downgraded eurozone
stocks to "neutral" from "overweight", saying a tilt towards
value stocks such as banks was a drag and policy response to the
COVID-19 crisis was weaker.
Germany's DAX .GDAXI fell 3.6%, while France's CAC 40
.FCHI dropped 4.2% as shares in automakers PSA PEUP.PA and
Renault RENA.PA retreated on data showing French car
registrations slumped by almost 89% in April.