By Carla Mozee, MarketWatch

Euro makes another run at $1.10 vs. dollar

LONDON (MarketWatch) -- European stocks slid Wednesday as the euro regained traction against the dollar, keeping German shares from advancing in the wake of encouraging data from Europe's largest economy.

The Stoxx Europe 600 dropped 1.1% to 397.95, marking the lowest close since March 17, with only the energy sector advancing.

The pan-European index was stuck in the red after a better-than-expected report on German business sentiment. The Ifo Institute's business-climate indicator (http://www.marketwatch.com/story/ifo-german-business-confidence-rises-again-2015-03-25) was at 107.9 in March, above the 107.3 forecast by a Wall Street Journal survey of economists and the highest level since July 2014.

"Germany's strength is good news for the rest of the eurozone, although the firming recovery in countries like Spain and even Italy means they may be less dependent on German demand than during the depths of the crisis in 2011/12," said Christian Schulz, senior economist at Berenberg, wrote in a report.

Despite the brighter sentiment figures, Germany's DAX 30 fell further as the session wore on, losing 1.2% to end at 11,502.31, its lowest close in two weeks, according to FactSet data.

The German index "is generally playing on the [euro-dollar] trade now," and the euro's advance against the greenback "impacts negatively on the highly weighted exporters on the DAX," said Richard Perry, market analyst at Hantec Markets, in emailed comments.

But Perry said he doesn't see this as too negative, with the "nice" three-month upward trend intact. The DAX has charged up 21% this year to record highs, benefiting from the devaluation of the euro stemming from a European Central Bank asset-purchase program worth 1.1 trillion euros ($1.21 trillion).

The euro (http://www.marketwatch.com/story/dollar-stays-weak-as-investors-look-for-fresh-clues-on-direction-2015-03-25)(EURUSD) on Wednesday bought $1.0977, and had pushed above $1.10 following the U.S. Commerce Department's report showing durable-goods orders unexpectedly fell (http://www.marketwatch.com/story/businesses-cutting-investment-as-durable-goods-orders-slide-2015-03-25). The euro late Tuesday fetched $1.0926.

U.S. stocks (SPX) (DJI) eventually dropped sharply amid low volume (http://www.marketwatch.com/story/us-stocks-wall-street-keeps-a-nervous-eye-on-the-sleeping-giant-dollar-2015-03-25).

In Frankfurt, shares of Deutsche Lufthansa SA fell 1.4%, extending losses in the wake of Tuesday's deadly Germanwings plane crash (http://www.marketwatch.com/story/france-launches-difficult-search-and-recovery-for-germanwings-flight-9525-2015-03-25) in the French Alps. Germanwings is a Lufthansa subsidiary. The Airbus A320 plane was carrying 150 people, none of whom survived.

In Paris, shares of Airbus Group fell 1.4%, contributing to a 1.3% fall in France's CAC 40 to 5,020.99.

Among the worst performers on both the CAC and the Stoxx 600 was Accor SA . Its shares dropped 4.3% after Eurazeo SA and Colony Capital said they plan to sell a 9.65% stake in the French company behind the Sofitel and Novotel hotel brands. Eurazeo shares fell 3.3%.

The U.K.'s FTSE 100 (http://www.marketwatch.com/story/ftse-100-edges-up-but-barclays-falls-after-downgrade-2015-03-25) fell 0.4% to 6,990.97, with shares of Barclays PLC down 2.5% following a ratings downgrade at Investec to hold from buy.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires