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 0930 GMT, the pan-European FTSEurofirst 300 index was down 0.6 percent at 1,012.64 points. In the past five-days, the index has lost about 5.2 percent, its biggest five-day slump since early July.
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. The DJ STOXX banking sector index index has lost 4.8 percent this year after gaining nearly 48 percent in 2009.
Banco Santander, HSBC, UBS, UniCredit and BNP Paribas fell 1 to 1.9 percent.
However, Spain's third-largest listed bank Popular rose 4.2 percent after it posted a 27.2 percent fall in 2009 net profit, beating forecasts, and said it was "reasonably optimistic" about this year.
Across Europe, the FTSE 100 index lost 0.6 percent, Germany's DAX fell 0.5 percent and France's CAC 40 slipped 0.6 percent.
In economic news, the German business sentiment rose more than expected in January, hitting its highest level since July 2008, while Britain came out of recession in the fourth quarter of 2009.
COMMODITIES UNDER PRESSURE
Energy stocks retreated as crude fell 1.2 percent on concerns over weaker global demand. Tullow Oil, BP and Total slipped 0.4 to 1.4 percent.
Miners were under pressure as metal prices weakened, with copper down 1.4 percent.
Anglo American, Antofagasta, BHP Billiton, Eurasian Natural Resources Corporation, Rio Tinto and Xstrata lost 0.9 to 1.7 percent.
On the upside, German engineering conglomerate Siemens gained 3.2 percent after it posted first-quarter operating earnings that far exceeded expectations.
German chipmaker Infineon rose 1.3 percent, with traders citing speculation that the company is to supply chips for Apple's iTablet.
