May 23, 2013 / 3:36 PM / in 5 years

Worries over end to monetary stimulus hit Europe shares

LONDON, May 23 (Reuters) - A benchmark European equity index had its worst one-day fall in nearly a year on Thursday, hit by worries over a possible end to U.S. economic stimulus measures, with mining and auto stocks among the worst performers.

The pan-European FTSEurofirst 300 index provisionally closed down 2 percent at 1,231.13 points, marking its biggest one-day fall since a 2.4 percent drop on July 23, 2012.

The euro zone’s blue-chip Euro STOXX 50 index also declined 2.1 percent to 2,776.40 points.

World stock markets, which have rallied this year on the back of liquidity injections and interest rate cuts by central banks, fell after U.S. Federal Reserve head Ben Bernanke said the Fed could scale back stimulus measures at one of its next meetings.

Mike Turner, European equity options broker at XBZ Ltd, said investors had bought “put” options betting on a future fall on the Euro STOXX 50 that were due to expire in July with a strike price of 2,400 points - implying a potential fall of more than 13 percent on that index over the next two months.

Peter Rice, head of investment strategy at Logic Investments, also felt the sell-off could deepen and advised investors looking to buy Germany’s DAX to wait for another 3-4 percent fall before buying back into that index.

“I think this broad-based sell-off could be a little bit more protracted,” he said.

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