* FTSEurofirst slumps 4.8 percent
* Banks fall after government intervention
* Oils tumble on lower crude prices
By Brian Gorman
LONDON, Oct 6 (Reuters) - European shares fell sharply in
early trade on Monday, with banks worst hit after further
measures to bail out major financial companies over the weekend,
and following a decline on Wall Street on Friday.
At 0818 GMT, the FTSEurofirst <> index of leading
European shares was down 4.8 percent at 1,037.36 points, with
just three gainers among its 312 stocks. The benchmark is down
more than 30 percent so far this year.
Banks took the most points off the index, with BNP Paribas
<BNPP.PA> down 3.4 percent, Credit Agricole <CAGR.PA> falling
6.8 percent, Dexia <DEXI.BR> slipping 11.2 percent and Societe
Generale <SOGN.PA> shedding 6.4 percent.
Commerzbank <CBKG.DE> tumbled 15.7 percent on big volumes.
HBOS <HBOS.L>, due to be taken over by Lloyds TSB, was down 14
percent. Lloyds fell 5.8 percent.
"Obviously there's a negative read from the poor
performance on Wall Street on Friday. There is no doubt the
unemployment position there is looking pretty poor. The economy
has lost jobs for the last nine months. It's a miserable state
of affairs," said Henk Potts, strategist at Barclays
stockbrokers.
"And then you add to that the banking problems we've seen
over the weekend."
BNP Paribas <BNPP.PA>, France's biggest listed bank, said it
was paying 14.5 billion euros ($20.1 billion) to take control of
European financial group Fortis <FOR.BR>. Trading in Fortis
shares was suspended on Euronext Amsterdam. []
Over the weekend, German officials clinched a renewed rescue
deal for property lender Hypo Real Estate <HRXG.DE> and
UniCredit <CRDI.MI>, Italy's second-biggest bank, announced
plans to raise new capital.
But Hypo Real shares were down 26 percent after slumping as
much as 48 percent in early trade.
Germany also offered a blanket bank deposit guarantee and
South Korea pledged to use its $240 billion in official reserves
to help its banks secure enough foreign currency liquidity.
"European governments are looking to stabilise the financial
sector by attempting to rescue some major institutions. Whilst
their actions are understandable, the smell of desperation
remains strong," said Chris Hossain, senior sales manager at ODL
Securities.
A $700 billion package to rescue the U.S. financial sector,
passed by the U.S. House of Representatives on its second try on
Friday and signed by President George W. Bush into law, also
failed to cheer investors.
"There's uncertainty over the price at which assets are
going to be bought. And the reality is that it will take some
time to see the benefit, and there's uncertainty on how quickly
the banks will lend to each other," said Barclays' Potts.
Across Europe, Germany's DAX index <> fell 4 percent,
UK's FTSE 100 index <> slipped 4.1 percent and France's CAC
40 <> shed 4.8 percent.
Oils were another notable casualty, with crude prices <CLc1>
falling as much as 4 percent to below $90 a barrel, on worries
of weaker demand. Total <TOTF.PA>, ENI <ENI.MI>, BP <BP.L>, and
Royal Dutch Shell <RDSa.L> all fell between 4.1 and 4.7 percent.
A stronger dollar led lower metals prices, hurting mining
shares. UBS and Merrill Lynch issued downbeat notes on the
sector, cutting their forecasts for metals prices, and lowering
price targets for shares.
Eurasian Natural Resources Corp. <ENRC.L> fell 15.3
percent. Anglo American <AAL.L>, Antofagasta <ANTO.L>, BHP
Billiton <BLT.L>, Kazakhmys <KAZ.L>, Rio Tinto <RIO.L>,
Vedanta Resources <VED.L>, Xstrata <XTA.L> all fell more than 8
percent.
(Additional reporting by Atul Prakash; Editing by Jon
Loades-Carter)
