European stocks drift lower as investors remain wary

European stocks drifted lower after earlier reversing a bigger drop, signalling a lack of conviction among investors.

UK shares fell on Tuesday, the FTSE 100 index was down 0.5 per cent at 5,931.08 points mied-morning on Tuesday, underperforming the broader pan-European FTSEurofirst 300.

Concern over global growth prospects amid a slowdown in China and uncertainty over the Federal Reserve’s actions is weighing on shares, boosting volatility. A gauge measuring swings on euro-area stocks is at its highest level since 2011 on a monthly basis, data shows.

The Stoxx Europe 600 Index dropped 0.2 per cent in late-morning trading in London, The benchmark gauge briefly reversed losses of as much as 1.8 per cent to rise 0.2 per cent before drifting lower again.

It has fallen 11 per cent in the third quarter, heading for its worst performance in four years.

"The greater macro uncertainty led by, but not exclusive to, China has really spooked investors,"said James Buckley, a portfolio manager at Baring Asset Management in London.

“The Fed doesn’t feel able to raise rates yet and there are concerns over whether Europe will be able to continue its very gradual recovery. We will soon be getting into earnings season which focuses more on the micro. I suspect we may have seen the worst of the selling.”

The Stoxx 600 has slipped 6 per cent in September, poised for its first back-to-back monthly drop in more than a year.