* FTSEurofirst down 1.8 percent
* Oils, banks lead decline
* Euro zone PMI drops to record low
By Nicholas Vinocur
LONDON, Dec 3 (Reuters) - European stocks fell 1.8 percent
early on Wednesday, with oil and bank shares leading the decline
as investors digested a sharp drop in business services activity
in the euro zone economy.
At 0951 GMT, the pan-European FTSEurofirst 300 index
<> was down 1.8 percent at 810.24 points, having risen 1.8
percent the day before.
Oil shares were the biggest losers on the index, with BP
<BP.L>, Royal Dutch Shell <RDSa.L> and Total <TOTF.PA> losing
between 2.6 and 4.1 percent. Oil <CLc1> rose above $47 a barrel,
recovering from a near 5-percent tumble the day before.
Electricite de France <EDF.PA> dropped more than 6 percent
after it offered to buy a 50 percent stake in Constellation
Energy Group Inc's <CEG.N> nuclear business.
Banks were trading lower, with Anglo Irish Bank <ANGL.I>
falling by 11.7 percent after it posted a 34 percent decline in
full-year earnings, while Commerzbank <CBKG.DE> fell 3.5 percent
and Swedbank <SWEDa.ST> lost 2.3 percent.
Allied Irish Bank <ANGL.I> was up 1.7 percent, however, on
hopes it would be recapitalised by the Irish government. Royal
Bank of Scotland <RBS.L> was up 2.8 percent.
Analysts said markets were braced for more bad news about
the state of the world's major economies and expecting decisive
action on interest rates from central banks.
"The fact is nobody is expecting anything good out of
economic data these days, and a lot of the gloom has already
been priced in," said James Hughes, an equity strategist at CMC
markets.
GRIM DATA
Euro zone services activity fell further than initially
thought in November, to a fresh record low, while inflationary
pressures continued to subside, a key survey showed.
The news added more weight to expectations that the European
Central Bank and the Bank of England will announce aggressive
interest rate cuts on Thursday.
"If we get a big cut from the ECB it will be a shot in the
arm for the market, but we have to be careful these moves aren't
factored in already. If we get any big surprises, they could be
seen as a panic measure or compensating for earlier inaction,"
Hughes added.
Miners were lower, with Rio Tinto <RIO.L> falling 8.7
percent on market talk of a rights issue. The company was not
immediately available for comment.
Anglo American <ANTO.L>, Eurasian <ENRC.L>, and Lonmin
<LMI.L> all fell between 2.1 and 2.3 percent as gold and copper
prices fell.
Later in the session, investors will look to U.S.
non-manufacturing PMI figures due at 1500 GMT for clues about
the health of the world's largest economy.
On the data front, euro zone retail sales data at 1000 GMT,
and U.S. non-manufacturing PMI figures due at 1500 GMT will be
in focus.
(Reporting by Nicholas Vinocur; editing by Simon Jessop)
