* FTSEurofirst 300 ends 1.6 percent lower
* Banks fall on concerns over U.S. bailout plan
* Commodities track metals, oil lower; utilities, drugs rise
By Sitaraman Shankar
LONDON, Sept 23 (Reuters) - European shares ended sharply
lower for the second straight day on Tuesday as investors
fretted about the fate of a $700 billion financial sector rescue
plan which the United States is trying to push through Congress.
The pan-European FTSEurofirst 300 <> index ended 1.6
percent lower at 1,108.54 points, adding to a 2.1 percent loss
on Monday after a record surge on Friday when news of the plan
emerged and several countries instituted short selling bans.
Banks took most points off the index, with UBS <UBSN.VX>
falling 7.9 percent and Royal Bank of Scotland <RBS.L> losing
5.9 percent.
Miners also fell sharply, tracking metal prices. Anglo
American <AAL.L> was the heaviest-weighted individual loser on
the index, falling 8.2 percent, while Rio Tinto <RIO.L> lost 5.1
percent.
Federal Reserve Chairman Ben Bernanke and Treasury Secretary
Henry Paulson stressed to Congress the dire consequences of
failing to move quickly on the plan for the government to buy up
hundreds of billions of dollars of tainted mortgage-related
securities.
"Paulson and Bernanke will do their utmost to get a sense
of urgency into Congress, but this is particularly sensitive
because of the election season, and politicians will take all
the room they can have to make populist changes," said Emiel van
den Heiligenberg, head of asset allocation at Fortis
Investments.
"We would expect the plan to be accepted, perhaps in a
slightly amended form, but stay cautious on markets because of
the recession and the impact on earnings. That's something that
needs more time to work itself out," he said.
Drugmaker Novartis <NOVN.VX> jumped nearly 3 percent after a
Credit Suisse upgrade, while chipmaker Infineon <IFXGn.DE> rose
1.3 percent on renewed market talk that it has found a buyer for
its memory chip unit Qimonda <QI.N>.
Infineon said it did not comment on rumours and reiterated
its position that it wanted to reduce its stake to below 50
percent by the next annual shareholder meeting in 2009.
BIG LOSS
Across Europe, Britain's FTSE 100 <> lost 1.9 percent,
France's CAC <> fell 2 percent and Germany's DAX <>
dipped 0.6 percent, outperforming as defensive utilities E.ON
<EONGn.DE> and RWE <RWEG.DE> gained 1.4 and 1.7 percent
respectively.
Energy shares were losers as oil eased after a record surge
the previous session. BP <BP.L>, Royal Dutch Shell <RDSa.L> and
Total <TOTF.PA> eased 0.1-1.8 percent as oil <CLc1> fell 2.3
percent.
The FTSEurofirst 300 has fallen more than 26 percent this
year after five years of gains, punctured by a credit crisis
that has driven banks to huge losses and slowed the economy.
Credit Suisse said in a European equity research note that
the U.S. authorities' action "has probably called time on the
bear market but has not yet signalled a bull market."
"Top-down, the immediate growth outlook is still impeded by
a need for the corporate and personal sector to de-lever,
suggesting that bottom-up, equity earnings estimates have
further to fall," Credit Suisse said.
Van den Heiligenberg said that markets still had plenty to
digest.
"We wouldn't advise anyone to buy a bounce -- if you have
any ammunition, sell the bounce," he said.
(Additional reporting by Peter Starck in Frankfurt; Editing by
Jon Loades-Carter)
