* FTSEurofirst 300 down 1.5 percent
* Euro STOXX 50 erases gains for the year
* Italy, Spain indexes hurt by political worries
* Commerzbank big faller, posts quarterly loss
By Tricia Wright
LONDON, Feb 4 European shares fell steeply on
Monday as mounting political uncertainty in major euro debtor
countries prompted investors to lock in profits on indexes
trading close to multi-year highs.
The FTSEurofirst 300 ended down 1.5 percent at
1,150.91 points, its lowest close since Dec. 31, having hit a
near two-year peak of 1,178.55 points towards the end of January
in a rally that raised it nearly 8 percent above a November
The euro zone's blue-chip Euro STOXX 50,
meanwhile, fell 3.1 percent to 2,625.17, erasing all of its
gains for the year.
A corruption scandal in Spain and polls showing Italy's
former prime minister Silvio Berlusconi regaining ground before
elections this month triggered fresh concern over potential
threats to euro zone stability and growth.
That pushed peripheral bond yields higher and prompted some
heavy profit taking on euro zone banks, down 5 percent,
Spain's IBEX, off 3.8 percent, and Italy's FTSE MIB
, down 4.5 percent.
Yves Maillot, head of European equities at Natixis Asset
Management, which has 286.5 billion euros ($392 billion) of
assets under management, said the fall should be viewed as a
pause rather than the start of a serious sell-off.
"For many weeks now we've had very positive performances so
that's the reason why we maybe need a correction in the very
short term," he said.
Suggesting there is still a lot of demand, equity funds
attracted another $18.7 billion during the final week of
January, fuelling talk of a long-awaited 'great rotation' out of
fixed income and into stocks, EPFR Global said.
Jonathan Stubbs, European equity strategist at Citi, said
that over the next two years, he would expect the first proper
bull market in equities since the mid to late 1990s.
"To get a proper bull market in equities you need to see...
growth coming through, you need a re-rating and you need
inflows. As we look out to the next one to two years we think
all of those ingredients will be in place," he said.
BANKS, AUTOS DENTED
Commerzbank was second-biggest faller on the FTSEurofirst
300 index, down 5.9 percent in brisk trade, after it posted a
larger than expected quarterly loss.
Trading volume in Commerzbank stood at more than twice its
90-day daily average.
"We're well overdue a bit of a sell-off... you've also got
some very disappointing results from Commerzbank this morning
which have basically fed into the banking sector," Michael
Hewson, senior markets analyst at CMC Markets, said.
European auto stocks also came under pressure, off
3.2 percent after gains left investors such as Citi and HSBC
sifting through the sector for companies that still offer some
The auto sector was the best performer in Europe in 2012,
surging 38 percent, and since September it has rallied around 20
percent, despite continued earnings per share downgrades.
Over the last six months I/B/E/S 12-month forward earnings
per share forecasts have been downgraded by 12 percent as
European car market fundamentals have deteriorated further.
HSBC said French car makers face major challenges and
downgraded Renault to "neutral" from "overweight"
after a strong share price run that has raised it 32 percent
since mid November.
Renault fell 3.3 percent.