European shares fall on China worries; banks weigh

European shares fell in early trade on Tuesday, extending their decline for a fifth day after China implemented a previously announced clampdown on lending, with banks and commodities the major fallers in Europe.

By 0810 GMT, the pan-European FTSEurofirst 300 index was down 0.7 percent at 1,011.34 points.

Sentiment was knocked after banking sources said China had implemented its latest rise in bank reserve ratios to curb excessive lending.

"Since China has started its banking proposals … this has generally been seen as a concern," said Justin Urquhart Stewart, director at Seven Investment Management.

"How do you let the air out of balloon easily, the answer is with difficulty … there is a level of Chinese uncertainty which hangs as a cloud over us."

Banks took the most points off the pan-European index. Banco Santander, HSBC, UniCredit and BNP Paribas lost 0.9 to 1.8 percent.

Commodities were under pressure as crude and metal prices retreated on concerns over weaker global demand.

Oil stocks BG Group, BP and Total lost 0.5 to 1.1 percent, while miners Anglo American, Antofagasta, Rio Tinto and Xstrata fell 1.5 to 3 percent.

On the upside, German engineering conglomerate Siemens gained 2.2 percent after it posted first-quarter operating earnings that far exceeded expectations.