* FTSEurofirst 300 down 0.3 percent
* Barclays outshines banks; insurers unveil more losses
* Market rules out ECB, BoE rate hikes in 2008
By Amanda Cooper
LONDON, Aug 7 (Reuters) - European shares ended Thursday's
choppy session down slightly as concern about the reach of the
credit crunch offset a potentially supportive shift in market
expectations for no more euro zone rate rises this year.
The European Central Bank and the Bank of England left their
respective interest rates on hold, as expected. The ECB
signalled it was unlikely to raise euro zone rates again any
time soon as growth risks had materialised.
But some of Europe's major financial groups including
British bank Barclays <BARC.L> and German insurer Allianz
<ALVG.DE> released results that showed the ongoing damage from
the credit crunch.
The FTSEurofirst 300 index <> of top European shares
ended down 0.3 percent at 1,190.06 points, having swung between
a gain of 0.9 percent and a loss of 0.7 percent.
Barclays shares were among the top gainers within the
European banking sector, rising 1.6 percent after the company
unveiled more writedowns but beat expectations with its results.
"Generally, the overall tone of the banks had been better. I
think not just in the UK but in America too," said Mike Lenhoff,
chief strategist and head of research at Brewin Dolphin.
"They haven't been quite as dismal as you might have been
led to believe on the back of all the things we know have been
going on," he said. "Also, I think a lot of bad news is already
priced into the equities market."
The market got a small lift from the ECB's indication it
would not raise euro zone rates again any time soon because of
the risks to regional growth.
DAMPENING U.S. IMPACT
But a weak start to trade on Wall Street and ongoing concern
about the impact of the credit crunch on some of the world's
largest companies kept any afternoon gains in check.
American International Group <AIG.N>, the world's largest
insurer, reported another large quarterly loss, while some of
its top European rivals, including Allianz and AXA <AXAF.PA>,
saw the credit crunch erode their profits.
Allianz shares were up 0.2 percent, having fallen earlier by
as much as 4.3 percent, while AXA was up nearly 5 percent.
Banks took the early spotlight in Europe after Barclays,
Germany's Dresdner <ALVG.DE> and Belgium's KBC <KBC.BR> unveiled
over $5 billion more in asset writedowns.
Other European bank shares fell. HSBC <HSBA.L> lost 1.2
percent, Banco Santander <SAN.MC> fell 1.7 percent, while KBC
lost nearly 7 percent, and Belgian financial services group
Dexia <DEXI.BR> lost 10 percent after announcing an overhaul for
its loss-making U.S. bond insurance unit.
The FTSEurofirst 300 got a brief lift earlier after the ECB
left euro zone rates at 4.25 percent in a widely anticipated
decision, and bank President Jean Claude Trichet later said
risks to growth had materialised, prompting financial markets to
rule out more rate rises this year.
"I was a bit surprised that Trichet conceded that growth
would be so weak in mid-year, especially given rates only rose
in July," said Commerzbank economist Peter Dixon.
"I would say that although Trichet suggests no bias to
rates, the risk is tilted towards the view that the next move in
rates is likely to be down."
Around Europe, London's FTSE 100 index <> was down 0.2
percent, while Frankfurt's DAX <> was down 0.3 percent and
Paris's CAC 40 <> edged up 0.2 percent.
Beyond the financial sector, utilities led by EDF <EDF.PA>
and energy shares ranked among the biggest gainers.
EDF bounced nearly 6 percent in response to planned
electricity tariff increases from the French government that
were larger than expected.
Shares in French water and waste management group Veolia
<VIE.PA> rose 9 percent after the company raised its 2008 sales
growth goal and vowed to speed up cost cuts and sell assets.
A firmer oil price <CLc1> helped BP <BP.L>, ENI <ENI.MI> and
StatoilHydro <STL.OL> edge up to the top of the leaderboard in
Europe. BP was up 2.4 percent, while ENI and StatoilHydro gained
1.8 and 2.3 percent and Total <TOTF.PA> rose 0.3 percent.
Elsewhere in the commodities sector, platinum miner Lonmin
<LMI.L> rose 0.6 percent. The company said it would vigorously
contest a $10 billion bid approach from miner Xstrata <XTA.L>.
Xstrata shares were down 1 percent.
On the downside, Nestle <NESN.VX> was among the largest
negative influences on the broader market after the world's
largest food company beat expectations with its first-half
profits, but the impact of the weak dollar and
lower-than-forecast volume growth stripped about 1 percent off
its shares.
(Editing by Will Waterman)
