* Euro near 2-month lows; sterling down 2 pct vs dollar

* European shares sink more than 2 pct

* Euro zone PMI comes in line with expectations at 34.4

* Aussie falls before expected hefty rate cut by RBA

(Recasts, changes dateline prvs TOKYO)

By Tamawa Desai

LONDON, Feb 2 (Reuters) - The euro hovered near two-month lows against the dollar on Monday while sterling sank more than two percent against the U.S. currency on worries over the financial sector and economic outlook.

Concerns about the financial system were reignited after Moody's Investors Service cutting its long-term ratings on Barclays Bank [ID:nPEK231315] and equity markets in Europe were battered in early trade.