Europe shares close lower; HSBC leads banks down

                                
 * FTSEurofirst 300 falls 4.3 pct, down for sixth day
                                
 * HSBC tumbles 8 pct on dividend, capital hike fears
                                
 * U.S. retail sales hit sentiment
                                
 
                                
 By Brian Gorman
                                
 LONDON, Jan 14 (Reuters) - European shares closed lower on
Wednesday, falling for the sixth consecutive session, with
financials hammered as heavyweight HSBC <HSBA.L> slid on worries
it will need to raise money to shore up its balance sheet.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
fell 4.3 percent to 804.17 points, its lowest close in three
weeks.
                                
 HSBC closed 8 percent lower after Morgan Stanley analysts
said the bank is likely to halve its dividend and may need to
raise up to $30 billion in a rights issue.
                                
 "It's a combination of many things coming at once," said
 Gareth Williams, European equity strategist at ING. "There's
the banking sector, US retail sales, the bankruptcy at Nortel.
Arguably, all this should be in the price, but coming together
it's raising concerns about the scale of the bad news in the
quarter."
                                
 The pan-European index fell more than 44 percent in 2008,
battered by a credit crisis that helped to tip several major
economies into recession.
                                
 There was more evidence on Wednesday of economic weakness.
The German economy contracted sharply in the final quarter of
2008, and euro zone industrial output plunged in November,
boosting expectations the European Central Bank will make a deep
cut to interest rates on Thursday. [ID:nLE319511]
                                
 Williams said the focus was now more on fourth-quarter
results than on the ECB decision.
                                
 Crude prices <CLc1> slipped 3 percent, as U.S. stockpiles
rose. This hurt oil majors such as BP <BP.L>, which closed 5.2
percent lower. 
                                
 European shares, already deep in the red, fell further after
news that U.S. retail sales fell 2.7 percent in December. Data
for October and November was also revised downwards.
[ID:nN13410674]
                                
  Nortel Networks Corp <NT.TO><NT.N>, North America's biggest
telephone equipment maker, filed for bankruptcy on Wednesday,
hoping to save a once high-flying business whose decline has
accelerated with the global economic crisis.
                                
 
                                
 HSBC DIVIDEND
                                
 "Our detailed study of HSBC's capital and asset quality
position reinforces our belief that it will have to halve the
dividend and raise major capital in 2009," Morgan Stanley
analysts Anil Agarwal and Michael Helsby said in a note.
                                
 Deutsche Bank <DBKGn.DE> tumbled 9.1 percent after saying it
has racked up a loss of about 4.8 billion euros ($6.4 billion)
in the final three months of 2008 alone.
                                
 Royal Bank of Scotland <RBOS.L> fell 18 percent. Other banks
to fall included BNP Paribas <BNPP.PA>, Banco Santander <SAN.MC>
and Credit Suisse <CSGN.VX>, down between 5.7 and 8.6 percent.
                                
Britain's Barclays <BARC.L> said it is cutting more UK-based
jobs in its retail and commercial banking business, which a
person familiar with the matter said is likely to mean a further
2,100 jobs will go. Its shares closed 14.4 percent lower.
                                
 HBOS <HBOS.L> and Lloyds <LLOY.L> fell 13.5 and 11.9 percent
respectively. HBOS will delist this week after Lloyds takes it
over. It was confirmed after the market closed that its
replacement in the FTSEurofirst 300 will be Belgian telecoms
firm Mobistar <MSTAR.BR>.
                                
 Miners featured among Europe's biggest losers, falling along
with metal prices, hammered by renewed worries over the outlook
for the global economy.
                                
 Anglo American <AAL.L>, Antofagasta <ANTO.L>, BHP Billiton
<BLT.L>, Eurasian Natural Resources Corp. <ENRC.L>, Rio Tinto
<RIO.L> and Xstrata <XTA.L> fell between 7.2 and 12.3 percent.
                                
 Cement maker HeidelbergCement <HEIG.DE> plunged 15.1 percent
on market talk it may carry out a capital increase to beef up
its balance sheet. The company declined to comment.
                                
Around Europe, the UK's FTSE 100 index <.FTSE> closed 5
percent lower; Germany's DAX index <.GDAXI> and France's CAC 40
<.FCHI> both lost 4.6 percent.
                                
 All 38 sectors in the pan-European index finished lower.
                                
 U.S. shares were lower around the time European bourses were
closing. The Dow Jones <.DJI>, S&P 500 <.SPX> and Nasdaq
Composite <.IXIC> were dowm between 3.1 and 3.4 percent.
 (Additional reporting by Blaise Robinson; editing by Elaine
Hardcastle)