2013.04.1707:19:30UTC+00European stocks hit by growth fears, gold rebounds

European shares sank by over one percent on Wednesday despite a recovery on Wall Street and across Asia, as investors positioned for sluggish growth in the euro area and ongoing monetary policy easing in the U.S. and Japan.

However gold, which had touched its lowest level in more than two years on Tuesday, jumped over one percent to hit a high of $1,381.80 an ounce as the prospects for further monetary stimulus improved investor sentiment.

"Fund managers in Europe are switching guns because they are seeing on the one side Japan with positive momentum and Europe just getting deeper and deeper into a recessionary environment," Didier Duret, chief investment officer at ABN Amro.

The concerns have grown since the International Monetary Fund on Tuesday trimmed its growth forecast for the world economy for this year and next to reflect government spending cuts in the United States, monetary expansion in Japan and the latest struggles of recession-stricken Europe.

The pan-European FTSEurofirst extended a three-day losing streak to fall 0.75 percent in early trade while London's 100, Paris's CAC-40 and Frankfurt's DAX were as much as 1.5 percent lower.

Earlier MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.4 percent, rebounding from Tuesday's sell off when it fell as much as 1 percent and was close to its 2013 low.

U.S. stocks had jumped more than 1 percent on Tuesday.

Gold, which has been leading a liquidation of assets across the board remained volatile despite its recovery and was last trading at $1,383.65, still up around 1 percent.

Crude oil futures also firmed, with Brent rising 0.15 percent to $100.33 a barrel, after breaching below $100 for the first time in nine months on Tuesday.

"We still believe that the recent volatility in the commodity prices was mainly driven by long position liquidation, while the underlying backdrop remains risk-positive due to expanding global monetary easing," said Vassili Serebriakov, strategist at BNP Paribas.

In the currency markets the Japanese yen resumed its fall against both the euro and the dollar as traders anticipated flows out of Tokyo by investors looking for higher returns due to the central bank's aggressive policy easing plans.

The dollar gained 0.8 percent to 98.31 yen after touching a low of 95.67 yen on Tuesday, while the euro rose 0.85 percent to 131.80 yen, well above Tuesday's low of 125 yen.