European shares down as ECB cuts rates to 1.5 pct

                                
 * FTSEurofirst 300 index falls 2.2 pct
                                
 * ECB cuts rates to 1.5 pct, BoE cuts to 0.5 pct
                                
 * Banks, commodities fall
                                
 
                                
 By Joanne Frearson
                                
 LONDON, March 5 (Reuters) - European shares were lower at
midday on Thursday after the ECB cut its key lending rate to a
record low of 1.5 percent and the Bank of England cut to 0.5
percent, another record, and fears over General Motors' <GM.N>
future weighed.
                                
 By 1302 GMT the pan-European FTSEurofirst 300 <.FTEU3> index
of top shares was down 2.2 percent at 681.06 points. The index
is down around 17 percent for the year.
                                
 The European Central Bank cut its benchmark rate by 50 basis
points to 1.5 percent.
                                
 "The cut is in line with expectations. But it should be some
time for another cut as policy makers will need to see how the
liquidity and global stimulus packages work before they
reconsider doing anything else," said Heino Ruland, strategist
at Ruland Research. 
                                
 Earlier the Bank of England's Monetary Policy Committee
(MPC) cut its key rate by another 50 basis points to a record
low of 0.5 percent, and said it would buy assets worth 75
billion pounds ($106 billion) in a drive to help the British
economy by expanding the money supply. [ID:nTAR005404]
                                
 "The MPC has acknowledged the cuts may still not be enough
and now has moved on to quantitative easing. Buying assets worth
75 billion sterling could be a positive sign," said Mike
Lenhoff, strategist at Brewin Dolphin.
                                
 But bank and commodity shares were the top losers.
                                
 Barclays <BARC.L> was down 12.9 percent after broker Panmure
said it would face "major losses" this year and next due to
risks related to its exposure to structured credit and monoline
insurers.
                                
 HSBC <HSBA.L>, Credit Suisse <CSGN.VX>, Banco Santander
<SAN.MC> were all down by between 3.3 and 5.7 percent.
                                
 British Life insurer Aviva <AV.L> slipped 28.7 percent as
analysts cited concerns over the company's capital strength
after the group said it will maintain its dividend.
                                
 Energy stocks were lower as crude <Clc1> fell 3.4 percent
after surging nearly 9 percent overnight. BG Group <BG.L>, BP
<BP.L>, Royal Dutch Shell <RDSb.L> and Total <TOTF.PA> were down
0.5-3.6 percent.
                                
 Miners also fell, with Anglo American <AAL.L> down 6.3
percent and Rio Tinto <RIO.L> down 5.9 percent.
                                
 Across Europe, the FTSE 100 <.FTSE> index was down 2.2
percent, Germany's DAX <.GDAXI> was 2.5 percent lower and
France's CAC 40 <.FCHI> was down 2 percent.

                                
 GM WORRIES; DRUGMAKERS, GDF SUEZ RISE
                                
 General Motors spooked investors by saying it had
substantial doubt about its ability to continue as a going
concern if it fails to stem its losses and generate cash, and it
may be forced to file for bankruptcy.
                                
 As investors sought sanctuary, drugmakers were the top
risers. GlaxoSmithKline <GSK.L>, Novartis <NOVN.VX>, Roche
<ROG.VX> were up 0.5-4.7 percent.
                                
 French utility GDF Suez <GSZ.PA> gained 4 percent after
reporting higher 2008 profits and stepped up cost-cutting
efforts to brace for an economic downturn that has pushed energy
prices sharply lower. [ID:nL5910463]
                                
 UK property firm Hammerson <HMSO.L> jumped 6.2 percent after
its 584 million-pound rights issue, announced last month to pay
down debt and strengthen its balance sheet, was seen to be
well-received.
                                
 But German steelmaker Salzgitter <SZGG.DE> fell 11.5 percent
on the back of weaker than expected 2008 results and a grim
outlook for 2009.
                                
 The BoE and ECB cuts come at a time when worries over the
economy are intensifying in Europe.
                                
 Euro zone GDP figures confirmed that Europe shrank 1.5
percent in October-December after a 0.2 percent drop the
previous quarter.
                                
 "The interesting aspect in the breakdown of the data is
falling consumer spending, which is quite significant. This
suggests Q1 could be as bad as Q4, 2008," said Luigi Speranza at
BNP Paribas.
                                
 On Friday investors will get the U.S. non-farm payrolls jobs
data, due out at 1330 GMT.
                                
 Bernard McAlinden, strategist at NCB Stockbrokers, said:
"The markets will look for some stabilisation in the U.S,
non-farm payrolls ... That's as much as you can hope for. There
are major doubts about whether the goverment actions will work."
 ($1=.7071 pounds)
 (Additional reporting by Brian Gorman; Editing by Greg Mahlich)
 (joanne.frearson@thomsonreuters.com; +44 207 542 2773, Reuters
Messaging:joanne.frearson.thomsonreuters.com@reuters.net)