European shares at seven-week lows on stimulus woes

Banks and commodity stocks most affected

European shares sold off again on Thursday with banks and commodity stocks, sectors most exposed to the broader economic fortunes, the top fallers on concerns about stimulus unwinding and Greek political turbulence.

By 0705 GMT, the FTSEurofirst 300 was down 18.30 points, or 1.6% at 1,156.49, led by miners down 2% and banks down 1.8%.

The broader index has fallen nearly 8% since mid-May and was just 13 points off retracing the gains enjoyed since mid-April, in a sign of how reliant and sensitive markets have become to monetary policy.

Worries over the political stability in Greece reared their head again, although Peel Hunt's equity strategist Ian Williams said the concerns over when stimulus withdrawal will occur in the United States remained the key focus for investors.

"Low volumes and high volatility will remain the order of the day at least until next week's FOMC (Federal Open Market Committee) meeting, with technical considerations set to dominate," he said.

The FTSEurofirst 300 has crashed through the 61.8% Fibonacci retracement of the rally that began in mid-April and topped out in mid-May, with the next level of real support being the 200-day moving average around 1,155.