European stocks slide on fears US stimulus ending

European stock markets slid on Thursday over concern about a possible end to US stimulus measures and as data revealed slumping business activity across the eurozone, while London came sharply off five-year highs. Shares in banks led indices lower, overshadowing upbeat company news across other sectors. Approaching midday, London's FTSE 100 index of top companies had slumped by 1.64 percent to 6,291.53 points -- a day after surpassing 6,400 for the first time in more than five years on the prospect of more cash stimulus from the Bank of England. Frankfurt's DAX shed 1.84 percent to 7,584.60 points and in Paris the CAC 40 index dropped 1.87 percent to 3,640.46. Milan dived 2.91 percent to 16,039.55 points, also hit by concerns over the outcome of upcoming legislative elections in Italy, traders said. The leading Milan stock index, the FTSE Mib, was pulled down by banking stocks and by shares in the Mediaset company, owned by Silvio Berlusconi who is bidding to return to power in the elections. European "equity markets are declining today, joining the global sell-off," said Gekko trader Anita Paluch. -- Gold falls -- "A disappointing housing report from the US and a hawkish tone of the FOMC minutes -- or at least how they were interpreted by the market participants -- have set the stage, followed by PMI data from eurozone that failed to indicate that the region is emerging from the economic slowdown." The European single currency fell to $1.3189 from $1.3283 late in New York on Wednesday. The dollar dropped to 93.26 yen from 93.61 yen, while the British pound reachest the, lowest point for two and a half years at $1.5132, but then rallied to $1.5216. Gold prices struck a seven-month low point of $1,555.55 an ounce in Asian deals. They later stood at $1,568.72 on the London Bullion Market compared with $1,588.50 on Wednesday. In the eurozone, a leading growth indicator on Thursday showed that private business activity across the bloc hit a two-month low in February, signalling a steepening of the economic downturn. The Purchasing Managers' Index published by London-based Markit fell to 47.3 in February from 48.6 the previous month. The February indicator contrasted sharply with an easing over the previous three months. The January figure notably showed private business activity at a 10-month high. "A steepening rate of decline in February is a disappointment, and suggests that the eurozone is on course to contract for a fourth consecutive quarter in the first three months of the year," said Markit's chief economist Chris Williamson. Minutes from the Federal Open Market Committee's (FOMC) most recent policy board meeting meanwhile showed some members were in favour of cutting short the $85 billion-a-month bond-buying introduced last year to support the economy and which has helped lift global shares. The Fed introduced a third round of its asset-purchase scheme, known as quantitative easing 3 (QE3), in September and said it would not take its foot off the pedal until unemployment had fallen and the economy was strong enough. However, investor sentiment took a hit after the Fed minutes showed a "number" of board members said an ongoing evaluation of the easing "might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labour market had occurred". On Wall Street the Dow closed down 0.77 percent on Wednesday and the S&P 500 lost 1.24 percent, with both markets having closed at more than five-year highs on Tuesday. The Nasdaq dropped 1.53 percent. Asian stock markets suffered a heavy sell-off on Thursday following the tumbles in New York. Tokyo fell 1.39 percent, Sydney slid 2.33 percent and Shanghai tumbled 2.97 percent. In Europe, banking shares fell sharply, with Italy's biggest bank Unicredit down 4.82 percent, Deutsche Bank losing 3.76 percent, Societe Generale shedding 3.44 percent and Lloyds Banking Group falling 2.73 percent. On the upside, BAE Systems gained 4.97 percent to 348.72 pence after the British arms maker announced plans to repurchase shares, alongside news of a drop in annual profits.