Sadly I think the misconception of Luther being anti-ethnic-Jew is part of antiChristian rhetoric that has spilled into common culture. Luther had a heavy opposition to the Talmud (and its teachers and followers), not to ethnic Jews. I mentioned in a different thread that if you read the Talmud and compare it to Luther's beliefs, you'll understand why.
Don't try and whitewash Luther's hatred of the Jews. He made his hatred quite clear in his book/tract, "The Jews and Their Lies." Many of Luther's recommendations for destroying the Jews were adopted by Hitler and his Nazis. Hitler often quoted Luther in rationalizing the destruction of the Jews. You need to familiarize yourself with Luther's writings on the Jews. Here are some quotes from his book, "The Jews and Their Lies":
Learn from this, dear Christian, what you are doing if you permit the blind Jews to mislead you. Then the saying will truly apply, "When a blind man leads a blind man, both will fall into the pit" [cf. Luke 6:39]. You cannot learn anything from them except how to misunderstand the divine commandments...
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Therefore be on your guard against the Jews, knowing that wherever they have their synagogues, nothing is found but a den of devils in which sheer self-glory, conceit, lies, blasphemy, and defaming of God and men are practiced most maliciously and veheming his eyes on them.
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Moreover, they are nothing but thieves and robbers who daily eat no morsel and wear no thread of clothing which they have not stolen and pilfered from us by means of their accursed usury. Thus they live from day to day, together with wife and child, by theft and robbery, as arch-thieves and robbers, in the most impenitent security.
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However, they have not acquired a perfect mastery of the art of lying; they lie so clumsily and ineptly that anyone who is just a little observant can easily detect it. But for us Christians they stand as a terrifying example of God's wrath.
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There is much more if you're really interested in the truth about Luther: Internet History Sourcebooks Project (fordham.edu)
Luther's words speak for themselves and he was filled with hate for the Jews and wanted them persecuted.