Swedish and European stocks slumped in early trading Tuesday on fears about the nuclear fallout and financial cost of Japan's natural disaster, analysts said.

The Stockholm market dived 3.35 percent in morning trading as share prices in European power companies tumbled and after the Tokyo market had closed down more than 10 percent Tuesday.

Swedish mining company Boliden and oil firm Lundin Petroleum were down almost 6 percent. Truck maker Volvo, whose main facility in Japan was forced to halt production, dived 5 percent. Swedbank was down 4.73 percent.

The London, Paris and Milan markets each dived more than 3.0 percent and Frankfurt shed 4.5 percent.

"Japan is being brought to its knees after the Nikkei plummeted... and the follow through to Europe is dragging stocks even lower as the prospect of a serious environmental catastrophe is being considered," said Simon Denham, head of trading group Capital Spreads.

As rescue workers continued to search for survivors from Friday's deadly earthquake and tsunami off the coast of Japan, all eyes were on the troubled Fukushima No.1 complex where four reactors have now suffered explosions.

Traders were also concerned about the world financial impact of the natural disaster on Japan, the world's third biggest economy.