* FTSEurofirst 300 down 2.1 percent at 1,229.58
* Bernanke spooks markets saying stimulus may end
* Weak China, euro zone data adds to investor anxiety
* Banks, miners top the fallers
* Dividend concerns hit Halford
By David Brett
LONDON, May 23 (Reuters) - Doubts over the Federal Reserve's long-term commitment to economic stimulus sent European stocks into reverse on Thursday, with losses in banks and miners compounded by weak data in Europe and China.
By 1034 GMT, the FTSEurofirst 300 was down 2.1 percent, or 26.70 points, at 1,229.58, after Ben Bernanke, chairman of the U.S. Fed, threatened an earlier-than-expected pullback of stimulus that has helped propel equities to multi-year highs.
Bernanke told a congressional committee late on Wednesday that the central bank could scale back the pace of bond purchases at one of its next few meetings, spooking investors who feared an early end to U.S. stimulus could jeopardise the global economic recovery.
The Euro STOXX 50 Volatility Index - a crude gauge of investor fear - surged 18 percent to a three-week high.
"Given how overbought the markets were it's not surprising to see a correction today. Markets may price in the easing measures from this point onwards," Jawaid Asfar, sales trader at SecurEquity, said.
Before Thursday's fall, European stocks were in overbought territory, according to the 14-day relative strength index.
A euro zone purchasing managers' survey on Thursday showed that while the slump in business activity eased slightly in May, it pointed to a further contraction in the second quarter.
Weak China factory data added to the strain on equities with an HSBC (LSE: HSBA.L - news) purchasing managers' survey showing Chinese factory activity shrank in May for the first time in seven months.
Sectors most exposed to the broader economy saw the biggest declines. Banks and miners fell 3.1 and 3.0 percent respectively.
Investors continued to punish companies that undershoot yield expectations with British bicycles-to-car-parts group Halfords tumbling 14.7 percent after it slashed its dividend to fund a three-year sales push.
Water provider United Utilities (LSE: UU.L - news) , however, was one of the few gainers, up 0.9 percent after raising its final dividend by 7.2 percent.
The euro zone blue-chip Euro STOXX 50 (Zurich: ^STOXX50E - news) index is up around 30 percent since mid-2012 as stimulus programmes from the Federal Reserve and other monetary authorities, and European Central Bank measures that helped avert the prospect of a break-up of the euro zone, pushed investors towards assets offering higher returns.
"After having touched the upper resistance line of the uptrend channel, the index is correcting," said Karel De Bie, technical strategist at BNP Paribas Fortis on the Euro STOXX 50.
"The rising wedge formation which took shape over the past weeks keeps the outlook lower towards 2,690 (around a 3 percent fall). If this level breaks, further weakness risks being seen towards the channel support line at around 2,600," he said.
