By Sara Sjolin and Carla Mozee, MarketWatch

LONDON (MarketWatch) -- European stocks fell Tuesday, as speculation about a rate hike in the U.S. and concerns over Greece's reform program outweighed optimism over the European Central Bank's bond buys.

The benchmark Stoxx Europe 600 index slumped 0.9% to end at 389.66. But outperforming the index, banking giant Credit Suisse Group AG (CS) jumped 7.8% after news that Prudential CEO Tidjane Thaim ( will take over the helm at the Swiss bank.

U.S. rate blues: European stock markets were hampered by a selling spree in U.S. stocks (, spurred by nervousness about what's seen as a virtually inevitable U.S. rate hike this year. A solid February jobs report released ( last week has increased speculation the Federal Reserve's statement next week might hint at a rate increase in coming months.

The European energy group suffered the biggest loss among major sectors, with dollar-denominated oil prices ( hit by the surge in the U.S. dollar ( against its rivals. The dollar has jumped due to the divergence between the Fed's widely anticipated shift into tightening mode and the continuing pursuit of stimulus by the European Central Bank and the Bank of Japan, among other central banks.

In the group, Galp Energia fell 7.8%, BG Group PLC lost 7.4% and Subsea 7 SA moved down 5.6%.

Greece jitters: With little data to distract on Tuesday, continued concerns about Greece's financial situation weighed on markets.

The Eurogroup of eurozone finance ministers urged Greece on Monday to stop wasting time and get moving on identifying economic reforms that satisfy its international lenders -- a prerequisite to unlock the next tranche of financial aid to Greece. The country is at risk of running out of cash later this month, unless it receives more money.

Technical talks on the economic measures will begin on Wednesday.

The uncertainty over Greece's financial future has over the past few months fanned fears the country will eventually leave the eurozone, although most economists consider it to be a relatively small risk. If, however, it were to happen, Standard & Poor's Ratings Services said in a note on Tuesday it would likely not have a significant impact on foreign banks, which was a major concern during the height of the eurozone crisis.

"We consider the direct impact on foreign banks from a Grexit or from continuing uncertainty about it as limited because they have relatively limited direct exposure to Greek banks or to Greece's public and private sector, having significantly reduced their lending since the restructuring of Greek government debt in 2012," said Standard & Poor's credit analyst Osman Sattar in the report.

ECB's cash injection: While grappling with Greece, investors also monitored the effect of the ECB's 60-billion-euro ($64.5 billion) a-month quantitative easing program that was kicked off Monday. Bond yields across most of the eurozone dropped close to record lows on the launch date and continued to decline on Tuesday. The yield on 10-year German government bunds during the session fell to 0.263%, a record low, according to electronic trading platform Tradeweb.

Euro slide: The shared currency fell to its lowest level since April 2003, hit by the Greek jitters and weakened by the ECB's QE program.

Other indexes: Germany's DAX 30 index dropped 0.7% to 11,500.38, falling back from a record closing high reached on Monday.

France's CAC 40 index lost 1.1% to 4,881.95. The U.K.'s FTSE 100 index tumbled 2.5% ( 6,702.84.

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