Banks, carmakers drag European shares lower

                                
 * FTSEurofirst 300 down 2.8 percent
                                
 * Automakers fall as Washington rejects GM plans
                                
 * Banks decline after Spain announces bailout
                                
 * For up-to-the-minute market news, click on [STXNEWS/EU]
                                
 
                                
 By Christoph Steitz
                                
 FRANKFURT, March 30 (Reuters) - European shares were lower
on Monday, led by automakers after Washington rejected
restructuring plans for General Motors <GM.N> and Chrysler, and
banks on Spain's first banking bailout since the crisis.
                                
 By 0825 GMT, the pan-European FTSEurofirst 300 <.FTEU3>
index of top shares was down 2.8 percent at 716.55 points. The
index is down about 14 percent in 2009, but has risen 11 percent
since reaching a floor on March 9.
                                
 "Today's main negative trigger is the GM-Chrysler news. Add
to this the Spain bailout and it's clear that the markets are
falling," said Giuseppe-Guido Amato, strategist at Lang &
Schwarz in Germany.
                                
 The Barack Obama administration said it would only fund GM
for the next 60 days, while it develops a more convincing
restructuring plan, with GM Chief Executive Rick Wagoner forced
out and being replaced by Chief Operating Officer Fritz
Henderson. [ID:nSP207882]
                                
 In Europe, Daimler <DAIGn.DE>, BMW <BMWG.DE>, Volkswagen
<VOWG.DE> and Fiat <FIA.MI> were all down between 5.5 and 7.7
percent, while the DJ Stoxx auto index <.SXAP> was the top
decliner in the sector, down 6.4 percent.
                                
 "A failure of General Motors would be negative for the other
carmakers, as it would drag along a large number of suppliers,"
said Heino Ruland, strategist at Ruland Research.
                                
 General Motors shares in Frankfurt were down 15.8 percent.
                                
 
                                
 BANKS DROP ON RENEWED WORRIES
                                
 Banks also dropped on news that the Bank of Spain would bail
out regional savings bank Caja Castilla la Mancha, renewing
worries about the state of financials. [ID:nLT726067]
                                
 "Sure, the Spain bailout doesn't help in today's market,"
said Oliver Roth, chief trader at German brokerage Close
Brothers Seydler.
                                
 "However, I think that the GM news with the potential
implications for the company's creditors -- some of the biggest
U.S. banks -- are hurting bank shares much more."
                                
 Banks took most points off the index, with HSBC <HSBA.L>,
Deutsche Bank <DBKGn.DE> and Societe Generale <SOGN.PA> down
between 4.2 and 9.6 percent.
                                
 The DJ Stoxx banks index <.SX7P> was the second-biggest
decliner in the sector, down 5.6 percent.
                                
 Shares in UBS <UBSN.VX> dropped 7 percent after a Swiss
newspaper said on Sunday that the bank would write down at least
another $2 billion on illiquid assets and cut a further 8,000
jobs. [ID:nLU227272]
                                
 No one at the bank could immediately be reached for comment
on Monday.
                                
 Across Europe, the FTSE 100 <.FTSE> index was down 2.4
percent, Germany's DAX <.GDAXI> was 3.5 percent lower and
France's CAC 40 <.FCHI> was down 3 percent.
 (Editing by Jon Loades-Carter)