* FTSEurofirst 300 index falls 0.96 pct
* HSBC falls after results, hurts other financial stocks
* Mining stocks decline as base and precious prices ease
By Amanda Cooper
LONDON, Aug 4 (Reuters) - European shares fell for a third
straight day on Monday, as results from HSBC <HSBA.L> hit
financial stocks and a broad-based decline in metal prices
dented the mining sector.
Shares in HSBC -- Europe's biggest bank -- were among the
largest individual drags on the European market, falling 1.4
percent after it said its first-half profit fell 28 percent, in
line with forecasts. A $14 billion hit on bad debts on U.S. home
loans and asset writedowns offset strong Asian growth.
The FTSEurofirst 300 index <> fell 0.96 percent to
1,152.55 points, although activity was light, with 63 percent of
the 30-day daily average volume changing hands.
With three major central bank decisions due this week, along
with a raft of earnings including Royal Bank of Scotland
<RBS.L>, French banks Societe Generale <SOGN.PA> and BNP Paribas
<BNPP.PA> and reinsurers Swiss Re <RUKN.VX> and Munich Re
<MUVGn.DE>, intraday volatility in the FTSEurofirst was at its
lowest in a month.
"This is a massive week for markets, they're going to be
pulled all over the place. I think the market will remain
volatile and will react to individual pieces of corporate data
and also there are big statements coming out. The Fed statement
tomorrow will be absolutely vital in terms of market direction,"
said Henk Potts, a strategist at Barclays Stockbrokers.
The U.S. Federal Reserve, which releases its policy decision
on Tuesday, the European Central Bank and the Bank of England,
which deliver their verdicts on Thursday, are all expected to
keep their respective interest rates unchanged.
But as economic growth in the three regions continues to lag
and inflation shows no signs of cooling, investors will be on
the lookout particularly for policymakers' thinking on the
likely path of interest rates.
BANKS UNDER PRESSURE
Results from HSBC and the focus on interest rates kept bank
stocks under pressure. Shares in BNP Paribas <BNPP.PA> were down
3.3 percent, while UBS <UBSN.VX> lost 4 percent and Spain's BBVA
<BBVA.MC> fell 2.3 percent.
"HSBC today was a reasonable set of numbers. I think they've
done well to expose themselves to the fast-growing emerging
markets, but clearly it's showing you the problems in the U.S.
continue, the credit crunch continues to bite and even for some
of the more successful financial institutions it continues to
take its toll," Potts said.
Belgian-Dutch group Fortis <FOR.AS> <FOR.BR> lost more than
3.2 percent after the company said writedowns had cut
second-quarter net profit in half and shoring up a weak balance
sheet was its top priority.
The DJStoxx index of European banks <.SX7P> is down 32
percent this year, while the FTSEurofirst, which fell for the
third month in a row in July, has lost 23 percent so far.
Susanne Lahmann, equity strategist at Bremer Landesbank,
said the modest rise in European stock markets over the past two
weeks was unlikely to last.
"I can't see where impulses for a further recovery could
come from," she said. "It is fairly quiet at the moment. I think
this week will be driven mainly by news from the interest rate
front," she said.
Around Europe, Britain's FTSE 100 index <> fell 0.6
percent, Germany's DAX <> fell almost 0.7 percent and
France's CAC 40 <> declined 0.8 percent.
A drop in the price of copper <MCU3=LX> to four-month lows
and spot platinum <XPT=> hitting six-month lows weighed on the
mining sector. Rio Tinto <RIO.L>, Xstrata <XTA.L> and Anglo
American <AAL.L> fell between 4.5 and 6 percent.
The sell-off in commodities extended to crude oil <CLc1>
which fell below $120 a barrel for the first time since early
May in the closing moments of trade on the European equities
market.
BP <BP.L> lost 0.6 percent, Norwegian oil and gas group
StatoilHydro <STL.OL> rose 0.5 percent and France's Total
<TOTF.PA> lost 1.1 percent.
(Additional reporting by Eva Kuehnen in Frankfurt; Editing
by Erica Billingham)
