* FTSEurofirst 300 closes 0.7 pct lower
* Commodities slip as crude, metals prices fall
* Banks broadly higher, Bank of America comments help
By Atul Prakash
LONDON, March 18 (Reuters) - European shares fell ahead of
the outcome of a U.S. Federal Reserve meeting on Wednesday, with
commodities down on weaker crude and metal prices, but banks
gaining after reassuring comments from Bank of America <BAC.N>.
The FTSEurofirst 300 <> index of top European shares
closed 0.7 percent lower at 710.90 points after falling as low
as 702.31. The benchmark has declined 14 percent so far this
year after plunging 45 percent in 2008.
Commodity stocks were among the top losers as crude oil
prices <CLc1> fell 2.5 percent, gold slipped more than 3
percent, nickel was down 1.3 percent and zinc lost 2.8 percent.
Royal Dutch Shell <RDSb.L>, BG Group <BG.L>, Repsol
<REP.MC>, Total <TOTF.PA> and StatoilHydro <STL.OL> shed between
1.4 percent and 3.1 percent.
"We are in a bottoming out process which might involve a
further spike down, but people are beginning to look ahead to
less bad times," said Andrew Bell, head of research at Rensburg
Sheppards.
"There are some signs that it's not quite as bad as it has
been in recent history, but less bad does not mean good."
Banks were mostly higher, helped by comments made by Bank of
America Chairman and Chief Executive Kenneth Lewis, who said in
an interview in the Charlotte Observer that the largest U.S.
bank could repay the $45 billion of government capital it has
taken by late 2009 or early 2010, depending on the economy.
Barclays <BARC.L> was up 5.2 percent, Royal Bank of Scotland
gained 4.1 percent, Societe Generale <SOGN.PA> rose 3.9 percent
and Credit Suisse Group <CSGN.VX> advanced 4.4 percent.
UniCredit closed flat after jumping 19 percent as the
Italian bank's 2008 results beat analysts' forecasts despite a
fall in net profit. It said 2009 would be tough but the start to
the year had been good.
Gains in the sector were capped as Britain's Financial
Services Authority warned that banks would have to retain more
capital than currently required under proposals to tighten
regulation and avoid a repeat of the current crisis. It also
called for a new European regulatory authority.
Investors were cautious ahead of the results of the Fed
meeting that was expected to end with a vow to do whatever it
takes to turn back the U.S. economy's deep recession.
With benchmark rates virtually at zero, the Fed has turned
its focus to pumping money into stressed credit markets to try
to get money flowing through the economy -- a policy Fed chief
Ben Bernanke has dubbed "credit easing".
"Bernanke no longer has his interest rate trump card to play
with so investors will intrigued to hear what other tricks the
Fed have up their sleeve," said David Evans, market analyst at
BetOnMarkets.com.
MINERS UNDER PRESSURE
Miners lost ground as key metals prices retreated.
BHP Billiton <BLT.L>, Anglo American <AAL.L>, Antofagasta
<ANTO.L>, Xstrata <XTA.L> and Eurasian Natural Resources
<ENRC.L> fell between 0.3 percent and 3.7 percent.
Rio Tinto <RIO.L> fell 6.8 percent, hit by concerns on the
fact that the company's planned $19.5 billion tie-up with
China's Chinalco is facing political opposition in Australia.
Despite recent gains in European shares -- the FTSEurofirst
300 gained five times in last seven sessions -- investors
remained cautious due to bleak economic news.
Data showed Britain registered its highest unemployment in
12 years, pointing to a longer, deeper recession than expected,
while a newspaper said France's economy could shrink by 1
percent in the first quarter, citing a source close to Economy
Minister Christine Lagarde.
A poll by the Banc of America Securities-Merrill Lynch
showed fund managers took their bond allocations to an all-time
high and their equity allocations near an all-time low in March,
despite becoming more optimistic about the global economy.
Among gainers, Italian Internet services provider Tiscali
<TIS.MI> jumped more than 16 percent on the prospect of its
founder returning to the company. Investors hoped Renato Soru
would be able to help sort out its financial problems. The
shares later pared gains to close 1.5 percent higher.
