European stocks sink to 6-wk lows on EM, Fed jitters
* FTSEurofirst 300 down 1 pct, EuroSTOXX 50 down 1.3 pct
* EuroSTOXX 50 below 100-day MA support, DAX below 50-day
* Fiat's LatAm weakness underscores EM risks
By Toni Vorobyova
LONDON, Jan 29 (Reuters) - European shares sank to six-week lows on Wednesday, breaking below technical support levels in the face of weak earnings and concerns that another trimming of U.S. monetary stimulus may exacerbate the emerging markets rout.
Emerging economies - key revenue sources for Europe's car makers, fund managers and other companies - have been hit by financial market turbulence this week, triggered by regional problems and by the prospect of another $10 billion cut in the U.S. Federal Reserve's bond purchases.
Analysts say the Fed decision, due at 1900 GMT, could expose the weakness in some emerging countries' finances as foreign cash moves out and local borrowing costs rise.
That, in turn, will eat into revenues of global companies exposed to emerging markets to the detriment of indexes such as the EuroSTOXX 50, whose constituents make around a third of their sales in emerging markets.
"If the Fed takes another $10 billion out of QE ... (EM currencies) will probably end up weakening further," Nick Xanders, who heads up European equity strategy at BTIG, said.
"For the last three years, investors have thought that they've put the glass slipper on Cinderella, but actually, when the QE is taken away, you realise it's the ugly stepsister."
The EuroSTOXX 50 was down 1.3 percent at 2,997.64 points by 1512 GMT, hitting levels last seen in mid-December.
The move was exacerbated by the break below a key technical support of the 100-day moving average, last at 3,013.87 points, which had acted as a floor for the market earlier this week.
Among the top regional fallers, the German DAX fell 1.1 percent, slipping below its 50-day moving average.
"Technically, at least in the DAX, we are through support at 9,350, so we have to accept that we are still in a correction ... and the reason might be some further worrying about the possible Fed decision and the emerging markets too," said Oliver Roth, head trader at Close Brothers Seydler.
Underscoring the emerging market risks for European companies, Fiat said results were hit by a slowdown in Latin America. Shares in the carmaker, which also cut its 2014 trading profit forecast, dropped 4.0 percent, among the top fallers on the broad FTSEurofirst 300.
Among the other losers, Norwegian aluminium producer Norsk Hydro fell 4.6 percent after forecasting higher costs, while Swedish hygiene and paper products maker SCA shed 5.0 percent after performance in two key divisions missed expectations.
One bright spot came from miners, with Antofagasta and Anglo American beating production forecasts, sending their shares up 5.6 and 4.4 percent, respectively. Analysts, however, questioned with this trend would benefit the sector in the medium term.
"There's a huge supply glut on its way in the mining sector, so you're going to see the words 'record' and 'production' come out of those companies for some time. But that's only going to depress the prices of the commodities they're producing," said Robert Quinn, chief European equity strategist at S&P Capital IQ.
Today's European research round-up
Asset returns in 2013: