European stocks suffered their biggest one-day fall in a month on Tuesday, with the main indexes breaking below their 50-day moving averages, as Japan's worsening nuclear crisis sparked a bout of profit taking. Alcoa's lower-than-expected revenue figures also fuelled concerns over the upcoming earning season and rattled investors, who were quick to book profits following an 8 percent rally over the past month. Mining and metal stocks featured among the top losers, with Xstrata down 4.1 percent and ArcelorMittal down 3 percent.
The FTSEurofirst 300 index of top European shares dropped 1.7 percent at 1,127.28 points, the index's lowest close in nearly two weeks. The benchmark index, as well as the broader STOXX Europe 600, the euro zone's blue chip Euro STOXX 50, France's CAC 40 and Germany's DAX all broke below their 50-day moving average, sending a clear bearish signal.
Energy shares dropped, with BP down 2.8 percent, Total down 2.5 percent and Repsol down 3 percent, as US oil futures tumbled 3.6 percent to around $106 a barrel, trimming a small portion of their recent sharp rally, as Goldman Sachs warned again of a price reversal and the International Energy Agency said high prices could be eroding demand.
Around Europe, UK's FTSE 100 index fell 1.5 percent, Germany's DAX index shed 1.4 percent, and France's CAC 40 lost 1.5 percent. Investors' risk aversion was on the rise on Tuesday, with the Euro STOXX 50 volatility index surging as much as 15 percent to 22.9 points, a two-week high.
The higher the volatility index, based on sell- and buy-options on the Euro STOXX 50 stocks, the lower investors' appetite for risky assets such as equities. According to Thomson Reuters StarMine, STOXX 600 companies due to post first-quarter results in the upcoming reporting season are expected to post an average negative earnings surprise of 1 percent.