(REUTERS) - European shares fell on Wednesday at mid-day after the Federal Reserve warned that the Eurozone debt crisis was a risk to the U.S. economy and did not signal any fresh stimulus measures to boost growth.
Cyclical stocks such as carmakers and miners, which perform well when economic growth is strong, were the worst hit after the Federal Reserve comments late Tuesday.
The STOXX Europe 600 Automobiles & Parts index down 3.3 percent was the worst performing sector in Europe, while the STOXX Europe 600 Basic Resources index was also a major faller, down 1.7 percent.
It is disappointing the Fed comments and reinforces the need for Europe to get itself in order, Howard Wheeldon, senior strategist at BGC Partners, said.
The crunch day is coming and soon enough there will come a time where euro authorities will have to act.
By 1235 GMT, the pan-European FTSEurofirst 300 index of top shares was down 0.9 percent at 964.18 points and broke through its 50-day moving average of 967.35. A move below this level is considered a bearish signal for equities.
Another negative factor was the outcome of an Italian bond auction where the country paid a euro era record 6.47 percent on its new five-year bonds. This raised worries about the country's longer-term financing sustainability even though the bond sale drew decent demand.
Italian yields are still very high and there is a lot of worry about whether these levels are sustainable, said Joe Rundle, head of trading at ETX Capital.
It is negative on equities as investors are worried about the downside risks to the economy if policy makers can not sort out the euro zone. We are seeing more investors playing the short side.
The Italian FTSE MIB was one of the worst performing exchanges down 1.7 percent and extended losses following the auction.
Earnings news, however, reflected a more mixed assessment of the global growth outlook.
Trading was active in firm Tele2 which dropped 3.7 percent in volume that was 143.7 percent of its 90-day daily average after Swedish telecoms company cut its subscriber growth forecast in Russia.
But Inditex jumped 4.3 percent to become the top riser in Europe after the world's largest clothing retailer's net profit beat expectations.