European stocks dropped, paring the benchmark Stoxx Europe 600 Index’s biggest two-day rally since February, as Spanish bond yields rose.

In Europe, a report said that registered unemployment in Spain, where more than half of young people are out of work, rose for the eighth month in March as the government deepened spending cuts and the economy tipped back into a recession. The number of people registering for jobless benefits increased by 38,769 to 4.75 million, the Labor Ministry in Madrid said today.

The yield on Spain’s 10-year bonds climbed 10 basis points to 5.45 percent. The nation’s debt will reach 79.8 percent of gross domestic product this year, up from 68.5 percent last year, the government said in its budget today.

National benchmark indexes fell in every western-European market apart from Denmark and Iceland. France’s CAC 40 Index lost 1.6 percent and the U.K.’s FTSE 100 Index slipped 0.6 percent. Germany’s DAX Index slid 1.1 percent. Spain’s IBEX posted the largest decline, falling 2.7 percent.

Popolare di Milano tumbled 6.6 percent to 38.2 euro cents. A gauge of lenders contributed the most to the Stoxx 600’s retreat today. Banco Santander SA, Spain’s largest lender, retreated 4 percent to 5.55 euros. Intesa Sanpaolo SpA dropped 4.7 percent to 1.27 euros and UniCredit SpA, Italy’s biggest bank, decreased 5 percent to 3.52 euros.

Ferrovial, the builder and airport operator, slumped 6.4 percent to 8.24 euros, its lowest price since May 2010, after Spain’s government capped corporate-tax deductions on financial costs to 30 percent of earnings before interest, taxes, depreciation and amortization.

Lonza gained 1.6 percent to 47.85 Swiss francs after it named Ridinger, who has worked at BASE SE and Henkel AG, as chief executive officer with effect from May 1.

UCB SA gained 1.5 percent to 34.33 euros. The Belgian drugmaker said that the U.S. Food and Drug Administration approved its Neupro medicine for the treatment of advanced stage idiopathic Parkinson’s disease.

Actelion Ltd., Switzerland’s largest biotechnology company, increased 2.7 percent to 34.46 francs as Credit Suisse Group AG raised the stock to outperform, the equivalent of buy, from neutral.