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Aug 2 Reuters European shares tumbled to twoweek lows on Wednesday, dragged by broadbased losses, as investors fled riskier assets after a surprise downgrade on U.S. credit rating by Fitch.

The panEuropean STOXX 600 index fell 1.7, touching its lowest level since July 18.

Rating agency Fitch on Tuesday downgraded U.S. debt rating, citing fiscal deterioration over the next three years and repeated downthewire debt ceiling negotiations that threaten the government39;s ability to pay its bills.

U.S. stock index futures slid about 1 though the dollar held steady and Treasury yields moved little on the news.

If the negative in equities is linked to that, it39;s a pure sentiment thing and not a rational move, said Caroline Simmons, UK chief investment officer at UBS Global Wealth Management, pointing to a mild reaction in U.S. bonds and the dollar.

Most people are saying earnings are doing well, markets are doing well but we do expect a slowdown to come at some point, particularly in the U.S. where valuations are quite expensive. So we will be sensitive to any potential negative newsflow.

Hopes of an end to the marketpunishing interest rate hikes from major central banks and signs of a resilient U.S. economy had pushed European stock markets to multiyear highs earlier this week.

The German DAX, however, pulled back from record highs on Tuesday…