UK stocks : FTSEurofirst 300 closes down 1.5 pct
with the Euro STOXX 50 Volatility index rising 9.7 percent.
However, other traders and dealers were more confident over the Italian situation, expecting that any sell-off linked to it would be relatively small and short-lived, before equity markets resumed an upwards trajectory again in late March or April.
Mike Turner, European equity options broker at XBZ Ltd, said he had not noticed clients buying "put" options to bet on a market fall in the run-up to the Italian vote.
Turner felt the sell-off reflected profit-taking by investors, following a rally in January with the FTSEurofirst still up around 2 percent since the start of 2013, rather than deeper worries over the euro zone's economic problems.
"Some of the gloss to the rally has been removed but it's more of a corrective sell-off rather than a negative one," he said.
The FTSEurofirst remains up from a 2013 low of 1,132.73 points. The Euro STOXX 50 is also up some 26 percent from lows reached last June, after a pledge by the European Central Bank (ECB) last year to do "whatever it takes" to protect the euro currency lifted equity markets.
Rupert Baker, a European equity sales executive at Mirabaud Securities, said investors were still buying up shares on days when the market fell for relatively cheap prices, on expectations of a gradual rise in European equities in 2013.
"Private client fund managers are still inclined to buy on the dip," he said.
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