LONDON, Jan 16 (Reuters) - European shares were dragged lower by a slide in Germany's blue-chip DAX index on Tuesday, after several large futures trades pushed it down through technical support, led by the country's top bank.
The large orders appeared to start the selloff that then snowballed, triggering further selling in the futures market as the index passed through 7,700 points, several traders said.
A stronger than expected ZEW index of investor sentiment had helped it trim losses by 1022 GMT, however, when the DAX traded down 0.5 percent at 7,707.55 points and the FTSEurofirst 300 index of leading European shares was down 0.2 percent at 1,163.98 points.
"With the stress about peripheral Europe easing, it's not a surprise to see big asset allocation trading programmes switching out of the DAX, and the money should flow into markets seen as riskier," a senior Paris-based trader said.
The reason for the trades was not immediately clear, although Deutsche Bank, down 1.8 percent and taking most points off the index, was the worst hit stock, and traders cited several potential triggers. Commerzbank also fell.
Some pointed to a report in German daily Boersen-Zeitung which said German regulator BaFin had ordered large banks to simulate a breakup, while others cited vague talk that Deutsche Bank would issue a profit warning.
BaFIN was not immediately available for comment and Deutsche Bank declined to comment when contacted by Reuters.