Germany's blue-chip Dax stock index moved further into correction territory on Tuesday, as jitters about the future of cash-strapped Greece took a bite out of its stellar performance this year.
The Dax closed provisionally 0.7 percent down on Tuesday, having traded almost 1 percent lower at 10,956 during the European session—more than 11 percent below a high hit above 12,000 in April.
On Monday, the stock index marked a 10 percent decline from its April peak—putting it technically into correction territory.
"We have talked many times about the impact of the toe-dragging negotiations between Greece and its creditors… Yesterday, the DAX index, which entered correction territory, has provided us with further evidence of how frustrated investors have become," Naeem Aslam, chief market analyst at AvaTrade, said in a note on Tuesday.
Talks between Greece and its international lenders for further cash in exchange for reforms have been deadlocked for months, raising concerns about a default and Greece's possible exit from the euro zone.
A European official told CNBC on Tuesday that Greece has submitted a new reform plan to its international creditors.
Concerns about Greece have hurt investor confidence in Germany, Europe's biggest economy, while a rout in the government bond market has also weighed on sentiment, analysts said.
But for now, most were viewing the correction in German stocks as just that—a downward move in a bigger bull market.
"If you go back to the beginning of the year and look at what happened in Germany—we had a weak euro, we had interest rates that were close to zero and that helped provide a boost to economic activity," Andrew Burkly, head of institutional portfolio strategy at Oppenheimer Asset Management, told CNBC on Monday.
"Since April, Bund yields have backed up almost 100 basis points and the euro has rebounded a bit, so that has taken a bit of steam out of the sails (of the Dax)," he added. "I would say it's more of a correction within a recovery pattern."
Even after the recent selloff, the Dax is up just over 10 percent in the year-to-date, putting it well ahead of the U.S.'s blue-chip Dow Jones industrial average—which is down 0.3 percent so far this year.
Nick Nelson, head of European equity strategy at UBS, told CNBC that he remained upbeat on European stocks.
"I think in the near term we can all see the red screens, we all know there's a focus on Greece and there are issues on getting an agreement. We know these concerns, we know these risks," he said.
"But if you look beyond the next six-to-12 months we see some pretty exciting opportunities for Europe," he added. "European earnings have not grown for 5 years and we're just starting to see signs of an earnings recovery. So relatively cheap valuations, recovery earnings make Europe an interesting place to be."