European stocks fell to three-week lows on Thursday, with benchmark indexes breaking below key support levels as recent lower-than-expected U.S. macro figures added to worries about global growth, while Total extended its sell-off.
The FTSEurofirst 300 index of top European shares was down 0.8 percent at a three-week low of 1,063.73 points at 1100 GMT, while the euro zone's blue-chip Euro STOXX 50 index was down 1.2 percent at 2,467.59.
Shares in the oil major drop 2.6 percent and extended this week's losses to nearly 10 percent - a market capitalisation wipeout of more than 9 billion euros ($11.9 billion)- as the company scrambles to solve a gas leak on a North Sea platform.
Total's troubles have prompted investors to book profits now on European stocks instead of waiting at the very end of the quarter. It's such a big company that it has a major impact on indexes, said David Thebault, head of quantitative sales trading, at Global Equities, in Paris.
But we are not seeing panic selling, and we'll have to wait the beginning of the new quarter next week before seeing if this is the start of a downward trend.
The FTSEurofirst and Euro STOXX 50 have both pierced through their 50-day moving averages as well as the 23.6 percent Fibonacci retracements of the recent three-month rally, two key support levels, sending a bearish technical signal.
The next strong support levels are on the 38.2 percent Fibonacci retracement of the rally, at 1,048.37 and 2,447.67 for the FTSEurofirst 300 and Euro STOXX 50 respectively.
Volumes remain anaemic, and if you play short-term strategies, it's not a bad idea to buy this dip. We could quickly bounce back the year's high, said Patrice Perois, trader at Kepler Capital Markets, in Paris.
But I wouldn't stay long after that, the market is lacking a catalyst at the moment, and most investors are on the sidelines.
Banks were among the biggest losers, with Banco Popolare down 2.4 percent, UniCredit down 1.9 percent and Deutsche Bank down 1.2 percent.
PUT/CALL RATIO ABOVE 2
The sharp rise in investors' risk aversion on Thursday was also reflected in a 5.7 percent jump in the Euro STOXX 50 volatility index, Europe's main barometer of anxiety known as VSTOXX index, as well as in the put/call ratio.
The VSTOXX index, which measures the cost of protecting against a decline in shares on the Euro STOXX 50 index, hit 24.45 on Thursday, a level not seen in three weeks.
The put/call ratio of Euro STOXX 50 options, a ratio of the trading volume of put options versus call options used to gauge investor sentiment, rose to above 2, signalling growing investor wariness of more losses to come for equities.
An increase in traded put options signals that investors are positioning themselves to benefit from a drop in stocks.
Thursday's losses in European stocks were following a drop in U.S. shares on Wednesday on Wall Street, where sentiment was hit by data showing new orders for U.S. durable goods came below analysts' forecasts, while a gauge of future business investment also fell short of expectations, raising doubts about the outlook for the world's biggest economy.
The first-quarter rebound has been technical as the systemic risks waned, but now it's hard to justify the rally if you look at fundamentals. There is scope for disappointment as people have become very optimistic, said Christian Parisot, head of global research at Aurel BGC.
Around Europe, UK's FTSE 100 index was down 0.8 percent, Germany's DAX index down 1.2 percent, and France's CAC 40 down 1.1 percent.