* FTSEurofirst 300 down 1.4 percent
* Federal Reserve hints at earlier stimulus withdrawal
* Euro zone flash PMIs weaker than expected
* All Stoxx 600 sectors in the red
By David Brett
LONDON, Feb 21 European shares tumbled on
Thursday as weak economic data dented sentiment already hit by
concerns the U.S. Federal Reserve may opt earlier than expected
to withdraw the stimulus that fuelled the recent equity rally.
By 1122 GMT, the FTSEurofirst 300 was down 16.07
points, or 1.4 percent, at 1,152.65, falling away from
Fed minutes on Thursday suggested it may have to slow or
stop buying bonds before seeing the pickup in hiring that the
programme is designed to deliver, due to concerns over excessive
risk-taking and the potential for instability.
"Equity traders have thrown a global tantrum this morning,
taking chips off the table in a clear indication that they don't
want to play without the Fed adding liquidity to the pot," Matt
Basi, sales trader at CMC Markets, said.
The FTSEurofirst 300 was dragged even lower after
manufacturing and services data dealt euro zone recovery hopes a
blow, suggesting the economy still needs central bank support.
"Equities have taken a sharp dip lower, exacerbated by
weaker than expected flash PMI readings from France and Germany
that fed into a weaker than expected compound euro zone
reading," Basi said.
Southern European indexes such as Spain's IBEX and
Italy's FTSEMIB, which had been bolstered the most
since central banks stepped up their support in the second half
of 2012, fell furthest, dropping 2 percent and 2.8 percent,
The FTSEMIB was further hurt as investors sought protection
against the risk that Italian elections next week could produce
a political stalemate that will make fiscal reforms more
difficult to implement.
"Some institutional investors are starting to take profit
ahead of the elections. There is a lot of uncertainty," one
The eurozone blue chip index dropped back down
through support of the 2012 high-turned-support level of 2,611
and 2013 lows around 2,600.
No sector avoided the cull, with miners among the
worst performers, down 2 percent.
Basic resource stocks littered the top fallers list as the
threat of stimulus being taken away hurt their already
precarious growth outlook and underlying commodity prices.
Traders banked gains in ENRC, down 3.2 percent,
which enjoyed a recent rally on bid speculation.
Global miner BHP Billiton extended the previous
session's losses, down 3.3 percent, as investment banks began to
downgrade their estimates for the company the day after BHP
posted heavy losses.
Commodity-related assets also continue to be dogged by
unconfirmed rumours of a struggling hedge fund ditching assets.
Banks and insurers , which have been at the
forefront of recent gains, were weaker as investors targeted
Europe's No. 2 insurer, AXA, shed 2.6 percent
after reporting a 4 percent fall in 2012 earnings.
Reinsurer Swiss Re, however, rallied 2.2 percent
after posting full-year 2012 earnings ahead of estimates.
Defence firm BAE Systems, which posted a 6 percent
slump in 2012 profit, rose 4.9 percent after sweetening
investors by announcing a three-year share repurchase programme
of up to 1 billion pounds and increasing its 2012 dividend.
With the European earnings season approaching the halfway
mark, 39 percent of the STOXX Europe 600 companies that
have reported so far have missed consensus estimates, StarMine
Jeff Taylor, head of European equities at Invesco Perpetual,
said that despite the blip on Thursday if one takes the longer
term view that the economy is on the road to recovery, plenty of
growth opportunities exist.
"We have had a good rally from the lows, but valuations do
not look extreme on an historical basis. Stocks yield around 4
percent. Forward price-to-earnings are below their historical
range ... the market does not look extended," he said.