European shares close down as financials sag

                                
 * FTSEurofirst 300 falls 0.7 percent; slips below 1,000 mark
                                
 * Financial shares among top decliners
                                
 * Energy shares, miners slip; weaker commods prices weigh
                                
 By Simon Falush
                                
 LONDON, Sept 21 (Reuters) - European shares posted a second
straight session of losses on Monday, weighed down by weaker
banks as investors retreated from risky assets ahead of a U.S.
Federal Reserve meeting and G20 summit.
                                
 Anxiety that a sharp stock market rally since March might be
overdone amid continued weakness in the global economy prompted
investors to cut their exposure to stocks and take refuge in
assets such as the dollar.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
closed down 0.7 percent at 999.06 points after falling 0.5
percent on Friday. The index rose above 1,000 on Wednesday after
an 11-month gap and hit a year high of 1,013.63 a day later.
                                
 Financial stocks were among the biggest decliners, with
Standard Chartered <STAN.L>, HSBC <HSBA.L>, Barclays <BARC.L>,
Lloyds <LLOY.L>, BNP Paribas <BNPP.PA> and KBC Groep <KBC.BR>
sliding between 1 and 2.1 percent.
                                
 Royal Bank of Scotland <RBS.L> fell 5.2 percent after a
source familiar with the matter said it was talking to investors
to gauge support for a "modest" equity placement of 3 billion to
4 billion pounds ($4.9 billion-$6.5 billion). [ID:nLK577890]
                                
 SEB <SEBa.ST> lost 1 percent. The bank said it planned to
buy back $1.1 billion of debt in a move to boost its core
capital buffers. It also said it would issue non-innovative euro
denominated capital contribution debt. [ID:nLL661375]
                                
 
                                
 FED FOCUS
                                
 The index has rallied 54.8 percent since hitting a record
low in March and is up 17.5 percent this quarter, on track to
post its best quarterly rise in almost a decade.
                                
 Investors this week were focussed on an upcoming Fed
meeting. The U.S. central bank is expected to keep its benchmark
Fed Funds rate unchanged at 0.25 percent, but investors are
looking for signs of how quickly it might remove its
extraordinary programmes to revive lending and hiring.
                                
 "With the run up to the Federal Reserve meeting on Wednesday
stock indexes could remain nervous and under pressure," Nick
Serff, Market Analyst at City Index said.
                                
 "Investors will not be expecting any change in U.S. rates
but will be very keen for signs as to when monetary policy could
start to tighten."
                                
 Investors also awaited the outcome of a meeting of the Group
of 20 leaders on Thursday and Friday in Pittsburgh. 
                                
 U.S. President Barack Obama said he would push world leaders
to reshape the global economy in response to the crisis.
                                
 The VDAX-NEW volatility index <.V1XI> jumped 5.8 percent and
touched a week high. The higher the volatility index, which is
based on sell and buy options on Frankfurt's top 30 stocks
<0#.GDAXI>, the lower investors' appetite for risk.
                                
 Miners came under pressure following metals prices, which
fell on concerns about rising inventories and a firmer dollar.
Anglo American <AAL.L>, Rio Tinto <RIO.L> and Xstrata <XTA.L>
fell 1.1-3.6 percent.
                                
 BHP Billiton <BLT.L> fell 2.7 percent. A Wall Street Journal
report said BHP Billiton planned to use part of a cash surplus
of around $18 billion to fund a round of acquisitions, possibly
involving some large rivals. [ID:nB432285]
                                
 But some analysts remained optimistic that the equity market
has still got more room for growth.
                                
 "We are still quite bullish," said Nick Nelson, European
equity strategist at UBS.
                                
 "The market might look slightly overbought near term, but
the economy is definitely improving, corporate profits are
definitely improving, interest rates are staying low and
valuations aren't expensive." 
                                
 Defensives supported the index as investors moved into
stocks seen as better placed to weather a weaker economy.
                                
 AstraZeneca <AZN.L>, GlaxoSmithKline <GSK.L> and Shire
<SHP.L> added 0.3-0.8 percent.
                                
 Energy shares were mostly weaker, tracking crude oil prices
<CLc1>, which fell below $70 a barrel on growing concerns about
the pace of economic recovery and signs of weak fuel demand. 
                                
 BG Group <BG.L>, Tullow Oil <TLW.L>, Repsol <REP.MC>, Total
<TOTF.PA> and StatoilHydro <STL.OL> shed 0.3 to 2.5 percent, but
BP <BP.L> and Royal Dutch Shell <RDSa.L> rose slightly.
                                
 Bank of England Monetary Policy Committee member Andrew
Sentance said there are big upside risks to energy prices when
the global economy recovers. [ID:nLL691805]
 (Additional reporting by Dominic Lau)