Prospects of less Fed stimulus push European shares to 2-week low
* FTSEurofirst 300, Euro STOXX 50 fall 0.8 pct in early trade
* Expectations of Fed tapering weigh on market
* CRH falls after cutting guidance
* Salzgitter hit by broker downgrades
By Sudip Kar-Gupta
LONDON, Aug 20 (Reuters) - European shares fell to a two-week low on Tuesday, as expectations hardened that the U.S. Federal Reserve will start to scale back monetary stimulus next month.
The pan-European FTSEurofirst 300 index fell 0.8 percent to 1,215.33 points in early session trade, its lowest level in around two weeks.
The euro zone's blue-chip Euro STOXX 50 index, which hit a two-year high last week of 2,855.89 points, also declined by 0.8 percent to 2,801.44 points.
The FTSEurofirst 300 index reached a 5-year high of 1,258.09 points in late May but has since slipped back on growing speculation that the Fed will soon taper its bond buying scheme, which has driven much of the global equity rally this year.
Parallel gains in core sovereign debt yields have also made stocks less attractive to investors.
Phoebus Theologites, chief investment officer at investment firm SteppenWolf Capital LLC, said now was a good time to sell shares for a profit, with the FTSEurofirst 300 still up 7 percent since the start of 2013.
"I would err on the side of locking in profits at current levels," said Theologites.
"Every day that you get a 'red' day in the States, it follows on through to Asia and Europe. I do not expect a crash, but I expect a dip of a few percentage points."
The Euro STOXX 50 Volatility Index jumped by 10.8 percent to 19.38 points, indicating uncertainty over the near-term outlook for markets, although it remained below its 2013 peak of 26.80 points.
Banks - a "high-beta" sector which outperforms rising markets but underperforms when markets fall - took the most points off the FTSEurofirst 300 index.
Building group CRH was the worst-performing FTSEurofirst 300 stock, falling 4.8 percent after it cut guidance, while German steelmaker Salzgitter fell 4 percent after both Morgan Stanley and Citigroup cut their ratings on the stock.
SteppenWolf Capital's Theologites said he would book profits on the Euro STOXX 50 while it traded above 2,800 points and would only buy back into the index if it fell to 2,500.
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