European shares hit year's lows; Greek stocks dive
* FTSEurofirst 300 down 1 pct, Euro STOXX 50 down 1.4 pct
* Greece's new political crisis knocks down local stocks
* European equities seeing net inflows -Lipper data
PARIS, June 21 (Reuters) - European shares tumbled on Friday in heavy trade, with one major benchmark turning negative on the year for the first time in 2013 as the prospect of reduced U.S. monetary stimulus continued to hit markets worldwide.
Greek shares plummeted, with Athens's benchmark losing 6.1 percent, after one party pulled out of the ruling coalition, leaving Prime Minister Antonis Samaras with a tiny majority in parliament.
The FTSEurofirst 300 index of top European shares ended 1 percent lower at 1,132.68 points, a level not seen since late December, and suffered its biggest weekly drop in more than a year, down 3.7 percent.
"We're at a turning point, and it has come earlier than investors had expected. Liquidity has now become the major focus for markets," said Roland Kaloyan, global asset allocation strategist, at Societe Generale CIB.
European stocks began to drop on Thursday after U.S. Federal Reserve Chairman Ben Bernanke confirmed the Fed would begin winding down its quantitative easing programme later this year, fuelling a worldwide selloff in stocks, fixed income and commodities.
The euro zone's Euro STOXX 50 index ended 1.4 percent lower at 2,549.48 points, on nearly twice the average daily volume over the past three months, a spike mostly due to the expiry of monthly and quarterly options and futures.
The blue chip index had spent most of the session in positive territory, underpinned by a reference option strike price of 2,600 points, before the sell-off started in early afternoon, around Wall Street's opening bell.
"We had an accumulation of negative news this week: the Fed talking about pulling the plug, weak Chinese macro data and big tensions in the country's banking sector, and another political crisis in Greece," Saxo Banque senior sales trader Alexandre Baradez said.
"But I think that we could see a rebound in the next 10 days. This has been a correction within a bullish market, and there's no bubble in equities. With yields going up in the fixed income space, we will see inflows coming into equities."
Data from Thomson Reuters Lipper shows European equities have been one of the few segments of financial markets to enjoy net inflows this week - the eighth straight week of inflow - while fixed income and emerging market assets have seen further sharp outflows.
Societe Generale strategists favour European stocks over U.S. peers, saying the latter have more to lose from the end of the Fed's quantitative easing.
"U.S. assets have benefited the most from the QE, with U.S. equities strongly outperforming, so we recommend staying away from U.S. stocks," SocGen's Kaloyan said.
"We're positive on European shares, however, as everyone is still 'underweight' European equities and stocks are quite cheap in terms of valuation, which should really limit the downside during the next few months."