Financials, pharma drag Europe shares down at close

                                
 * FTSEurofirst 300 index ends 0.8 pct lower
                                
 * Market ignores ECB rate cut, BoE measures
* Financial stocks slip ahead of U.S. stress test
                                
 By Atul Prakash
                                
 LONDON, May 7 (Reuters) - European equities ended lower on
Thursday after gaining in the previous six sessions, with weaker
drugmakers and miners weighing on the market and financials
retreating ahead of the results of a stress test for U.S. banks.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
closed 0.8 percent lower at 851.37 points after hitting a
four-month high of 878.08.
                                
 Several banks gave up early gains ahead of the stress test
results. Part-nationalised UK lender Lloyds <LLOY.L> fell 14.3
percent after warning bad debts on corporate loans were rising
significantly and reiterating it expected a loss in 2009.
                                
 Societe Generale <SOGN.PA> fell 9.8 percent on a surprise
loss in the first quarter as higher-than-expected writedowns and
provisions hit earnings. Barclays <BARC.L> reported a 79 percent
rise in first-quarter impairments, taking the shine off a record
start to the year for its investment bank arm.
                                
 Barclays shares fell 4.3 percent, Royal Bank of Scotland
<RBS.L> was down 9 percent, AXA <AXAF.PA> fell 3.5 percent and
Credit Agricole <CAGR.PA> slipped 2.3 percent.
                                
 Investors awaited the results of tests of the ability of the
19 largest U.S. banks to weather a deep recession were to be
released at 2100 GMT and are expected to show about half the
banks need more capital.
                                
 Citigroup <C.N>, Bank of America Corp <BAC.N> and some other
top banks might be needed to raise tens of billions of dollars
in capital.
                                
 "Wall Street may have been impressed initially by claims
that some of the bank liquidity shortfalls that will be
announced later today have come in some way smaller than
expected, but the numbers involved are still eye watering," said
Jimmy Yates, head of equities at CMC Markets.
                                
 "And if this capital is to be raised in the open market,
it's difficult to see how it won't have some knock on effect on
asset prices in general, at least in the short term."
                                
 Investors ignored moves by the European Central Bank (ECB)
and the Bank of England (BoE) to boost growth, as the measures
were on expected lines. A drop in U.S. jobless claims and better
German manufacturing also failed to cheer the market.
                                
 The ECB cut rates to a record low of 1.0 percent and said it
could spend about 60 billion euros in a corporate bond purchase
scheme. The BoE increased its asset purchase programme by 50
billion pounds ($75.8 billion) and left interest rates at a
record low of 0.5 percent. [ID:nL7375413] [ID:nL7190022]
                                
 
                                
 MINERS SLIP 
                                
 Mining shares were under pressure as copper fell 1 percent
and zinc slipped 1.1 percent. BHP Billiton <BLT.L>, Anglo
American <AAL.L>, Antofagasta <ANTO.L> fell 0.8 percent to 1.2
percent.
                                
 Drugmakers, often considered as defensive stocks, also lost
ground. Novo Nordisk <NOVOb.CO> fell 3.8 percent, Shire <SHP.L>
was down 0.9 percent, Merck KGaA <MRCG.DE> was down 3.8 percent 
and Novartis <NOVN.VX> fell 0.7 percent.
                                
 "After the relief rally that we saw, some people are taking
profits, which is quite reasonable," said Paris-based Franz
Wenzel, strategist at AXA Investment Managers.
                                
 "A lot of good news has been discounted and the market might
take a wait-and-see attitude to see that all the green shoots
are going to blossom."
                                
 Energy stocks were generally higher as crude oil prices
<CLc1> rose more than 2 percent. BP <BP.L>, Royal Dutch Shell
<RDSb.L>, BG Group <BG.L>, Repsol <REP.MC>, Total <TOTF.PA> and
StatoilHydro <STL.OL> added 0.2 percent to 3.3 percent.
                                
 Deutsche Telekom <DTEGn.DE> fell 1.9 percent. It reported a
quarterly loss of 1.1 billion euros ($1.47 billion) as it took a
1.8 billion euros impairment charge at its T-Mobile UK unit.
Telecom Italia <TLIT.MI> reported a 4.5 percent fall in profit,
its shares were almost flat.
                                
 Porsche <PSHG_p.DE> fell 17.9 percent after the sports car
maker scrapped attempts to take over Volkswagen and agreed to
explore a merger with Europe's biggest carmaker.
                                
 Among significant gainers, Swiss Re <RUKN.VX>, the world's
second-biggest reinsurer, jumped 11.8 percent after posting
better-than-expected first-quarter earnings.
                                
 Consumer goods giant Unilever <ULVR.L> <UNc.AS> jumped 9.8
percent as it beat forecasts with a 4.8 percent rise in
first-quarter underlying sales.
                                
 Across Europe, the FTSE 100 <.FTSE> index was up 0.1
percent, Germany's DAX <.GDAXI> was 1.6 percent lower and
France's CAC 40 <.FCHI> fell 1 percent.
 (Editing by Andrew Macdonald)