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Mediterranean stocks plummet as GDP disappoints

Spanish, Italian, Greek and Portuguese stocks tumbled on Thursday, after euro zone growth data disappointed and uncertainty lingered about the prospect of the European Central Bank announcing monetary stimulus soon.

Preliminary data for Greece showed that economic activity contracted in the first three months of the year, down 1.1 percent on the same quarter a year before.

The Cypriot economy contracted by a massive 4.1 percent over the period, while the Italian economy shrunk 0.5 percent.

Economic activity across the region disappointed with the exception of Germany, which saw expansion double.

The 18-country bloc saw economic growth of 0.2 percent in the first quarter, compared with fourth quarter 2013. This missed analyst expectations of 0.4 percent growth. In the fourth quarter last year GDP also grew by 0.2 percent, data from Eurostat showed.

Read MoreEuro zone businesses see strongest quarter in 3 years

AFP/Staff | AFP | Getty Images

After the data was released, the Greek benchmark stock index closed down around 4.6 percent. Portuguese and Italian stocks closed unofficially down 2.8 percent and 3.7 percent respectively.

Read MoreCatch up on the day's trade in Europe

"It is not surprising, and disappointing GDP will continue for the next two years if we do not facilitate the life of the business community," Secretary-General of Eurochambres Arnaldo Abruzzini told CNBC.

"It is true that certain members states are seeing a rebound on a GDP basis, but this is minimal. Many businesses – particularly those that have been hit hard by the crisis – are still struggling. In Italy, Greece, Spain, the rate of businesses that close down still outweighs those that are being created," he said.

Germany powers ahead

The German economy was the stand-out performer, posting 0.8 percent growth in the first three months of this year as households and the government upped their spending, aided by extremely mild weather

Year-on-year, Germany's economy grew 2.3 percent, the largest increase in over two years, Germany's Federal Statistic Office said on Thursday. Growth in the last three quarters of 2013 came in at 0.4 percent.

A boost in construction gave the economy a lift. Exports of goods were down at the start of the year, while imports were markedly up from the previous quarter.

Read MoreEuro zone deflation risks low: European Commission

Data released earlier showed the French economy failed to grow in the first quarter of this year after household expenditure and exports slowed considerably, after registering slight growth in the previous quarter.

Meanwhile in the Netherlands, the Dutch economy contracted sharply. Data showed GDP declined 1.4 percent in the first quarter compared to 0.8 percent growth in the previous quarter.

At the same time data showed Finland's economy fell back into recession for the first three months of the year as key industries weakened. Preliminary data showed output fell 0.4 percent from the previous quarter, following a decline of 0.3 percent in the final quarter of last year, marking a technical recession.

Read MoreUK economy grows for fifth straight quarter

"Looking ahead, two opposing trends will affect the future growth path of the economy. On the positive side, the elements of Germany's economic success formula are almost unchanged: the strong labour market, wage increases and the construction sector should support growth in the coming quarter," said ING economist Carsten Brzeski.

"On a more negative side, the weakening of Germany's biggest trade partner, France, combined with the ongoing geopolitical crisis close to Germany's backyard and the Chinese slowdown, the former growth engine exports is currently only running at half speed," he said.

The preliminary data for France showed first-quarter gross domestic product (GDP) came in at 0.0 percent after 0.2 percent growth in the fourth quarter of 2013, according to INSEE, France's national statistics office.

Read MoreTepper on the market: 'I think it's nervous time'

Car purchases in the euro zone's second-largest economy fell over one percent, exports decelerated and investment in construction slid.

INSEE also revised France's debt to GDP ratio to 91.8 percent from 93.5 percent in 2013 and revised GDP growth for 2012 up to 0.3 percent growth from a previous 0.0 percent estimate.

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