UK stocks : FTSEurofirst 300 down 1.5 pct
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 trough.
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,
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