* Euro STOXX 50 Volatility Index rises 10.1 pct
* FTSEurofirst 300 down 1.4 pct at 1,272.95 points
* FTSEurofirst 300 closes at lowest since Dec. 18
* Emerging-market worries continue to weigh
* Euro STOXX 50 falls 1.7 pct to 2,963.96 points
By Sudip Kar-Gupta
LONDON, Feb 3 European shares fell to a
one-and-a-half month closing low on Monday, knocked back by data
that showed China's economy losing momentum and by growing
worries about the affect on companies of turmoil in emerging
The pan-European FTSEurofirst 300 index, which in
January had its first monthly loss since August, ended down 1.4
percent at 1,272.95 points - its lowest close since finishing at
1,259.06 points on Dec. 18 last year. The euro zone's blue-chip
Euro STOXX 50 index also fell, by 1.7 percent to
Uncertainty over the near-term outlook drove the Euro STOXX
50 Volatility Index up 10.1 percent to 24.02 points. The
index has gained about 57 percent since Jan. 21, reflecting
fears about a slump in emerging markets over the last two weeks.
Fresh evidence of a slowdown in economic growth in China
came after China's official Purchasing Managers' Index (PMI)
dipped in January.
Emerging markets, which depend heavily on investment from
the likes of China and the United States, have been hit by
uncertainty over the outlook for China and a scaling-back in
U.S. economic stimulus.
The winding down of the U.S. Federal Reserve's bond-buying
programme has pushed up returns on U.S. Treasuries, causing
investors to buy back into Treasures while selling out of
"What's been interesting has been the scale and the rapidity
with which the emerging markets have unwound," said Christopher
Mahon, director of asset allocation research at Barings' Global
Multi Asset Group. "Although we don't think equities will do
badly and will end up higher than they were at the start of the
year, we think it will come with more volatility than 2013 had."
TOO RISKY TO BUY ON THE DIP?
Shares in companies with a significant exposure to emerging
markets fell sharply. Cement maker Lafarge fell 4
percent. Spanish bank Banco Santander - which is
exposed to Latin America - also weakened 3 percent.
The STOXX Europe 600 Banking Index was also knocked
by a 5.9 percent fall at Swiss bank Julius Baer after
the bank posted lower-than-expected earnings.
In spite of the upheaval in emerging markets, many investors
with looking over the whole of 2014 remain optimistic about
European equities. They say stocks should gradually recover from
the early declines, then gain as the economy slowly recovers.
Those with a shorter-term view said now was not the time to
return to stocks. Montaigne Capital fund manager Arnaud Scarpaci
said the Euro STOXX 50 could fall back to the 2,700-2,730 range.
David Thebault, head of quantitative sales trading at Global
Equities, also expects more near-term volatility.
"It's not yet time to buy this dip," Thebault said.