May 30, 2012 / 3:37 PM / 5 years ago

CORRECTED-European shares fall as Spanish crisis deepens

LONDON, May 30 (Reuters) - European shares fell sharply in light volume on Wednesday and looked poised for further jitters amid signs that Spain's economic and banking crisis was deepening and on renewed concerns Greece may fall out of the euro zone.

Spain's Ibex 35 index fell 2.8 percent to a fresh 9-year low as investors worried that soaring borrowing costs may force the country, engaged in an expensive recapitalisation of its banking sector, to seek an international bailout. .

The European Commission offered Madrid more time to reduce its budget deficit and direct aid to recapitalise distressed banks - two measures that had so far been opposed by Europe's paymaster, Germany.

"Right now we're in a sort of suspicious vacuum of support coming from Germany, which is making the market slightly nervous," said Arthur van Slooten, a strategist at Societe Generale, who recommended investing in U.S. Treasuries and corporate bonds to protect one's capital from the euro zone crisis.

The FTSEurofirst 300 provisionally closed 1.5 percent lower at 975.86 points, having traded 105 percent of its 90-day volume average. The blue-chip Euro STOXX 50, which fell 2 percent, traded 70 percent of its volume average.

The index extended losses in the afternoon, when a Greek poll showed that an anti-austerity party had gained the lead ahead of elections next month that may determine whether the debt-laden country stays in the euro.

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