European shares suffered their biggest daily drop this month after gloomy earnings and weak U.S. economic data hit sentiment on Wednesday and left some positioning for further falls in the near-term.
European equities scaled fresh two-year highs on Tuesday, boosted by miners, as optimism about economic recovery gained momentum following encouraging U.S. home price data and comments over growth in top metals consumer China.
SYDNEY, Jan 29- Sterling took the spotlight on Tuesday, though for all the wrong reasons, as a dour economic background and persistent rumours of a possible credit downgrade dragged the British currency to a 13- month trough on the euro and a five-month low on the dollar.