The pan-European FTSEurofirst 300 .FTEU3 index of top shares provisionally closed 1.2 percent lower at 1,131.54 points — its lowest closing level for 2011 and the second straight day of declines.

The index ploughed through the 38.2 percent Fibonacci retracement of the rally from its November low to February high, before pulling back just short of the 50 percent retracement level around 1,128 points.

Chief among the macroeconomic concerns were intensifying worries about the euro zone debt crisis after Moody’s cut Spain’s sovereign debt rating one notch and warned of further downgrades, hitting peripheral banking shares.

“The market is hoping that the European Financial Stability Fund will be increased in size and that they (European Union leaders) will agree to start buying bonds. That might bring some relief to the market,” said Andrea Williams, who manages 1.2 billion pounds in assets for Royal London Asset Management.

Economic figures also pointed to a sluggish pace of recovery after data showed a bigger-than-expected rise in weekly US jobless claims.

Heavyweight mining shares were under pressure, with the STOXX Europe 600 basic resources index down 3.1 percent, as weak Chinese import data casted doubt on demand for metals, after the country posted its largest trade deficit in seven years.