European shares fell early on Thursday, adding to losses suffered in the previous session as weak economic data fueled worries that the U.S. recovery is losing momentum and Moody's downgraded Greek debt.
At 5:08 a.m. EDT, the FTSEurofirst 300 index of top European shares was down 0.9 percent at 1,121.08 points, into negative territory for 2011 and below the 50-day average, a bearish technical signal.
The index fell 1 percent on Wednesday as a report showed U.S. private sector job creation was way below forecasts in April, and manufacturing growth declined sharply.
Miners tracked metals prices lower on worries that an economic slowdown would weaken demand. Antofagasta, Rio Tinto and Xstrata all fell between 2.5 percent and 3.1 percent.
Renewed worries about euro zone debt also weighed on shares.
A European Central Bank policymaker said a voluntary deal for investors to keep renewing their Greek debt holdings might be acceptable, raising hopes on Wednesday for an aid agreement to prevent a default by Greece
But Moody's Investors Service slashed Greece's credit rating by three notches to take it deep into junk territory, citing a growing risk that Athens would fail to stabilize its debt position without a restructuring that could mean losses for private investors.
The cost of insuring Greek debt against default rose.
"The outlook is darkening. It must be worrying for the global economic authorities. It has cost about $10 trillion worldwide to create the impression of an economic revival and we have nothing to show for it," said Jeremy Batstone-Carr, strategist at Charles Stanley.
"One of the potential outcomes of this is we may see further quantitative easing. The knee-jerk reaction to that would be the same as for QE2, with commodities rising sharply."
Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC40 fell between 1 and 1.3 percent.
The Thomson Reuters Peripheral Eurozone Countries Index was down 0.4 percent.
Some strategists played down the effect of Greece on equities. "We're not worried about Greece. It's come back to the fore, but it's in the price," said Julian Wentzel, head of research at Macquarie.
Among individual stocks, home improvement chain Kingfisher fell 3.2 percent as it warned of tougher times ahead, though it said first-quarter profit was up 19 percent.
Wentzel remained upbeat on the prospects for equities.
"The headline (economic) numbers are bad, but the absolute numbers are better. We think there will be a leg down, but we don't buy the double dip story," said Wentzel, head of research at Macquarie.
He cited growth in China as a reason for optimism, even as data showed a slowdown in growth there. "China is a big part of the world economy. And it's growing at 7-8 percent, down from 10 or 11, but that's still strong growth."
He added: "We're looking for high quality yield at the moment - your food staples, your pharmas, your telcos, Telefonica."
Some bourses, including those in Austria, Denmark, Finland, Norway, Sweden and Switzerland were closed for Ascension Day holidays.
(Editing by Greg Mahlich)