European shares drift lower; banks, pharma weigh

                                
 * FTSEurofirst 300 down 0.3 pct after hitting 4-week low
                                
 * Financials, drugmakers among top decliners
                                
 * Royal Bank of Scotland falls 7.2 percent
                                
 * For up-to-the-minute market news, click on [STXNEWS/EU]
                                
 By Atul Prakash
                                
 LONDON, Nov 2 (Reuters) - European shares hit a four-week
low on Monday, extending the previous session's sharp declines
on doubts that the stock market had rallied ahead of economic
recovery, with banks featuring among top losers.
                                
 By 0829 GMT, the FTSEurofirst 300 <.FTEU3> index of top
European shares was down 0.3 percent at 973.90 points after
falling to 968.19 -- the lowest since early October. It fell 2.1
percent on Friday, the biggest one-day slide in nearly four
months, hit by weak U.S. consumer sentiment data.
                                
 The index, which is up 17 percent so far in 2009, has gained
51 percent since hitting a record low in early March.
                                
 Banks were among the top losers, also pressured by news that
CIT Group Inc <CIT.N>, a U.S. lender to hundreds of thousands of
small and medium-sized businesses, filed for bankruptcy on
Sunday, as the global financial crisis left it unable to fund
itself and the recession hit its loans. [ID:nN01408863]
                                
 Standard Chartered <STAN.L>, Barclays <BARC.L>, Societe
Generale <SOGN.PA>, Credit Agricole <CAGR.PA> and UBS <UBSN.VX>
fell 0.2 to 0.7 percent.
                                
 "Everybody is anxious and knows that the market went a
little bit too fast," said Koen De Leus, economist at KBC
Securities.
                                
 "To change that sentiment, we have to see much better
macroeconomic figures because now company earnings won't be able
to support the stock market anymore as results of the biggest
companies are over," he added.
                                
 Lloyds <LLOY.L> was down 2.7 percent. The Financial Times
reported that the bank will attempt to raise 7.5 billion pounds
($12.3 billion) capital by offering existing bond holders the
chance to exchange their bonds for riskier but higher yielding
investments that could convert into equity. [ID:nL2303369]
                                
 Part-nationalised Royal Bank of Scotland <RBS.L> fell 7.2
percent after the lender said EU authorities would order more
disposals than it had expected in return for approval of state
aid RBS received after coming close to collapse last year.
                                
  The VDAX-NEW volatility index <.V1XI>, a measure of
investor risk appetite or aversion, hit a two-month high and was
up 1.9 percent, adding to Friday's 14 percent jump. The higher
the index, which is based on sell and buy options on Frankfurt's
top-30 stocks <0#.GDAXI>, the lower is investors' appetite for
risky assets.
                                
  
                                
  DRUGMAKERS UNDER PRESSURE
                                
  Pharmaceutical shares were among top decliners, with
Novartis <NOVN.VX> falling 0.9 percent on news that French
drugmaker Sanofi-Aventis SA <SASY.PA> asked a U.S. federal court
to block a Novartis unit from selling a generic version of its
cancer drug in the United States because it infringes a patent.
                                
 Sanofi-Aventis rose 0.5 percent. It wants to double its
vaccine business in the next five years, its chief executive
told a German newspaper on Saturday. [ID:nLV208474]
                                
 Shire <SHP.L> fell 0.9 percent after Panmure cut its rating
on the stock to "hold" from "buy", while AstraZeneca <AZN.L>,
GlaxoSmithKline <GSK.L>, Merck <MRCG.DE>, Novo Nordisk
<NOVOb.CO> and Roche Holding <ROG.VX> dropped 0.1 to 1.4
percent.
                                
 Linde <LING.DE>, the world's number 2 industrial gas
producer, rose 1.5 percent after posting a smaller-than-expected
fall in third-quarter operating profit and said demand had
started to recover slowly. [ID:nL2272252]
                                
 Investors braced for more U.S. macro data later on Monday on
construction spending, pending home sales as well as data from
the Institute of Supply Management.
                                
 In macro-economic news, China's manufacturing sector
expanded at the fastest pace in 18 months in October as demand
both overseas and at home grew quickly, an industry survey
conducted by British research firm Markit showed on Monday,
pointing to sustained strength for the sector. [ID:nPEK121771]
 (Editing by Hans Peters)