By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- European stocks finished flat Tuesday, marking the end of a volatile session during which equities hit intraday lows after a key survey underscored fears about slowing growth in Germany.

The closely watched ZEW economic sentiment indicator sank into negative territory for the first time since November 2012, falling to negative 3.6 in October, compared with 6.9 points in September. Geopolitical tensions and weak economic development in parts of the eurozone are a source of persistent uncertainty, said ZEW President Clemens Fuest in a statement.

"The eurozone growth story may be an old one at this stage, but the rate of decline only appears to be accelerating and were seeing nothing from the surveys to suggest confidence is bottoming out," wrote Craig Erlam, market analyst at Alpari UK. "This doesn't bode well for the end of the year, nor does it suggest that [European Central Bank] efforts to slow it are having any impact."

After the release of the ZEW survey, the German government said it's cutting its economic growth projections for 2014 and 2015, to 1.2% and 1.3%, respectively. The move follows a recent round of weak data, including a drop in exports and industrial output.

Markets: The Stoxx 600 fell by as much as 1.4%, according to FactSet, after the ZEW survey. But it came off session lows as U.S. stocks traded higher in the wake of better-than-expected financial results from Citigroup Inc. and Johnson & Johnson.

The Stoxx 600 closed down less than 1 point at 321.53, but the small loss was enough to mark a sixth consecutive decline for the benchmark. The euro (EURUSD) dropped to $1.2662, down from late Monday's level around $1.2691.

Germany's DAX 40 turned higher after Wall Street's open, finishing the session up 0.2% at 8,825.21.

Investors earlier Tuesday received a report that Spanish consumer prices fell at a slower pace in September than in August, with core inflation dipping into negative territory for the first time in more than four years. Also, French consumer prices fell by a more-than-expected 0.4% in September.

Spain's IBEX 35 index ended up 0.2% and France's CAC 40 rose 0.2% to 4,088.25.

The FTSE 100 index also marked a turnaround, closing up 0.4%. Stocks had been under pressure after government data showed a unexpectedly sharp decline in U.K. inflation in September.

Movers: Among movers in European trade, shares of Michael Page International PLC fell 7.6% after the recruitment services provider cut its operating forecast for the full year.

Iliad SA jumped 10% after the French telecommunications company said Monday it is dropping its bid for T-Mobile US (TMUS). The move come after Iliad was rejected by majority shareholder Deutsche Telekom and members of T-Mobile's board.

Daimler AG shares rose 3.7% after the German auto maker posted higher earnings and free cash flow in its industrial business in the third quarter.

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