By Amanda Cooper
LONDON, March 3 (Reuters) - Banks drove down European shares
for a fourth day on Monday as U.S. data did little to dispel
concern over the potential for U.S. recession, while HSBC
<HBSA.L> rallied after turning a profit last year.
Financial shares were the worst performers on the broader
European market. British mortgage lender HBOS <HBOS.L> fell
almost 8 percent, while Royal Bank of Scotland <RBS.L> shed 3.6
percent and UBS <UBSN.VX> lost 3.3 percent.
Nationwide U.S. manufacturing data showed factory activity
contracted last month, although not by as much as originally
feared, which helped equities recover some of the day's losses.
The FTSEurofirst 300 index <> dropped 1.3 percent to
1,298.11 points, having fallen by as much as 2 percent earlier
in the session.
"The market is absolutely desperate to gauge exactly how
quickly the U.S. economy is slowing down and what is the
potential threat of inflation," said Henk Potts, a strategist at
Barclays Stock Brokers.
HBSC was the top positive weight on the market, rising 3
percent after it reported a 10 percent rise in profit last year,
buoyed by growth in Hong Kong and elsewhere in Asia which helped
Europe's biggest bank absorb $17.2 billion in bad debts linked
to the U.S. housing crisis.
The DJ Stoxx index of European banking shares <.SX7P> was
down 1.6 percent, as Commerzbank <CBKG.DE> fell 3.5 percent amd
ING <ING.AS> shed 2.1 percent.
The FTSEurofirst 300 has fallen by about 14 percent so far
this year and is down by about 20 percent from the 6-1/2 year
peaks of last July.
EARNINGS SURPRISE
Goldman Sachs said in a note that European corporate
earnings within the DJ Stoxx 600 index <> have come in
better than expected, but analysts' 2008 earnings estimates have
fallen and were likely to be lowered further.
Worries over global growth hurt oil prices, dragging energy
stocks along with it. Total <TOTF.PA>, Royal Dutch Shell
<RDSa.L> and BP <BP.L> fell between 0.8 and 2.6 percent.
Shares on Wall Street were down. Billionaire investor Warren
Buffett on Monday told CNBC he is no longer offering to
guarantee $800 billion of municipal bonds backed by MBIA Inc
<MBI.N>, Ambac Financial Group Inc <ABK.N> and FGIC Corp, three
large bond insurers.
Aside from a few standout gainers, the sell-off in Europe
was fairly deep, with declining issues outnumbering advancers by
about six to one on the FTSEurofirst.
German truckmaker MAN <MANG.DE> rallied 4.3 percent after
carmaker Volkswagen <VOWG.DE> said it would take majority
control of Sweden's Scania <SCVb.ST>. The move ends a stalemate
over the future of Scania, which last year fended off a hostile
bid from Man.
Scania shares were last down by more than 8 percent, having
leapt by about 14 percent in early trade on Monday.
Volkswagen, which now has a controlling voting stake in
Scania, says it wants to explore cooperation possibilities with
MAN. A combination of MAN and Scania would create Europe's
biggest truck maker.
Other gainers included French-listed Airbus parent EADS
<EAD.PA>, which rallied 9 percent after winning part of a $35
billion U.S. Air Force refuelling deal late on Friday in a
surprise blow to Boeing <BA.N>.
Around Europe, Britain's FTSE 100 <> fell 1.1 percent,
Germany's DAX <> lost 0.9 percent and France's CAC <>
shed 1 percent.
(Additional Reporting by Sitaraman Shankar and Ana Nicolaci da
Costa; Editing by David Cowell)
