Banks lead Europe shares lower; Barclays tumbles

                                
 * FTSEurofirst 300 index falls 1.9 pct
                                
 * Banks weigh as writedown fears continue
                                
 * Ericsson gains after Q4
                                
 
                                
 By Joanne Frearson
                                
 LONDON, Jan 21 (Reuters) - European shares were down early
on Wednesday, with the beleaguered banking sector leading the
fallers as fears the industry needs to raise further funds
deepened.
                                
 By 0937 GMT, the pan-European FTSEurofirst 300 <.FTEU3>
index of top European shares was down 1.9 percent at 760.01
points, losing ground for the ninth time in 10 sessions.
                                
 "The crisis is about what the value of bank equity is," said
Jim Wood-Smith, head of research at Williams de Broe.
                                
 "There are concerns about whether banks can meet their
solvency ratios," he said.
                                
 "We have governments saying that if institutions can not
meet them, then they are going to give them as much money as
they can. The problem is trying to work out the implications of
that on the equity value," he said 
                                
 The banking sector was the biggest faller on the index.
                                
 Barclays <BARC.L> fell 26 percent to their lowest level
since 1985 as the threat it needs to raise funds or could be
nationalised continued to dog the bank. [ID:nLL283101]
                                
 Lloyds Banking Group <LLOY.L>, Commerzbank <CBKG.DE>,
Deutsche Bank <DBKGn.DE> and BNP Paribas <BNPP.PA> lost between
7.1 percent and 15.4 percent.
                                
 KBC Groep <KBC.BR> fell 9 percent after its chief executive
told Belgian daily newspaper De Tijd, in an interview published
on Tuesday, that the Belgian banking and insurance group is not
seeking cash from the government, but does not rule out needing
fresh funds in the future. [ID:nLK318635] 
                                
 Belgium is mulling a second bailout for its troubled banking
sector, whose shares have come under renewed pressure in recent
days, Finance Minister Didier Reynders told Belgian news agency
Belga on Tuesday. [ID:nLK471289]
                                
 Credit Suisse <CSGN.VX> fell 3.8 percent after the
Handelszeitung newspaper quoted a bank insider as saying
Switzerland's second-largest bank could report a full-year loss
of up to 6 billion Swiss francs ($5.25 billion).
                                
 Credit Suisse spokesman Andres Luther declined to comment on
the report, but was quoted in the Handelszeitung article as
defending the bank against suggestions its trading business took
on too much risk.
                                
 "The party balloon has burst. Sadly the Barack Obama rally
which we may have been looking for looks a bit like a damp
squib," said Justin Urquhart Stewart, director at Seven
Investment Management.
                                
 "The banking industry is in a state of serious concern. He
could not have picked a worse time to take over," he said.
                                
 However, Societe Generale <SOGN.PA> gained 3.4 percent after
it said it expected a full-year net profit of about 2 billion
euros, below the average market forecast, but calmed fears of
losses and a capital increase. [ID:nLL321637]
                                
 Shares in Royal Bank of Scotland <RBS.L> rose 6.8 percent.
                                
 After banks, energy shares took the most points off the
pan-European index as crude <CLc1> hovered at about $41 a barrel
amid fears of a deep recession.
                                
 BG Group <BG.L>, BP <BP.L>, Royal Dutch Shell <RDSb.L> and
Total <TOTF.PA> were down between 1.5 percent and 1.9 percent.
                                
 Tullow Oil <TLW.L> fell 1.4 percent after it said it was
launching a share sale equal to about 10 percent of issued
shares, which could raise about 400 million pounds ($561.9
million), to help finance the development of new oil finds.
[ID:nLL227627]
                                
 ERICSSON GAINS AFTER Q4
                                
 There were only a few sectors which gained on the index.
                                
 Telecom equipment maker Ericsson <ERICb.ST> soared 9.6
percent as it posted fourth-quarter operating earnings above
market expectations and said it would continue cutting costs
across the group.
                                
 French peer Alcatel-Lucent <ALUA.PA> rose 4.3 percent.
                                
 Looking at macroeconomic news, in the UK the Bank of
England's Monetary Policy Committee voted 8-1 to cut interest
rates by 50 basis points to a record low of 1.5 percent this
month, with arch-dove David Blanchflower calling for a reduction
of a full point. [ID:nBOE001706]
                                
 The number of Britons claiming unemployment benefit rose for
an 11th consecutive month in December, while the total number of
people out of work surged close to the 2 million mark, official
data showed. [ID:nONS004015]
                                
 Across Europe, the FTSE 100 <.FTSE> index was down 1.3
percent, Germany's DAX <.GDAXI> was 1.4 percent lower and
France's CAC 40 <.FCHI> was down 1.9 percent.
 (Reporting by Joanne Frearson; Editing by Andrew Macdonald)