REFILE-European shares fall, end worst quarter since 2002

                                
 (Refiles to fix mistyped stock code for Shell in paragraph 20)
                                
 By Amanda Cooper
                                
 LONDON, March 31 (Reuters) - European shares fell on Monday,
securing their worst quarterly performance in more than five
years, as renewed concern about the credit crunch hit bank
stocks and a broker downgrade dragged down Vodafone <VOD.L>
                                
 A rise in oil and gas shares helped stem the decline in the
broader European equity market, which has now fallen for five
months in a row, its worst run since a six-month stretch of
declines between April and September 2002.
                                
 Banks were the worst performing sector after a Merrill Lynch
research note said Switzerland's UBS <UBSN.VX>, one of the
biggest casualties of the credit crunch among Europe's large
banks, may see further writedowns. 
                                
 The FTSEurofirst 300 index of top European shares was down
0.26 percent at 1,262.14 points.
                                
 The index has lost more than 20 percent since a 6-1/2 year
high last July as the fallout from the credit crunch has
gathered pace and raised concern over corporate profitability
and the global growth outlook.
                                
 "You can break the market down into two components. You've
got the credit crunch affecting financials and then you've got
the economic slowdown," said Kevin Lilley, a portfolio manager
at Royal London Asset Management who helps manage 1.1 billion
euros ($1.74 billion).
                                
 "We are now five years into this economic cycle and I think
people's estimates are way, way too high," he said, adding: "It
is difficult to see the market making major headway when there
are going to be major downgrades coming through."
                                
 Vodafone fell nearly 4 percent, taking the most points off
the index, after Morgan Stanley cut the stock to "underweight"
from "overweight" and slashed its price target to 170 pence from
215p, citing concerns over potential regulatory action to align
mobile phone termination rates with costs.
                                
 UBS shares fell as much as 4.8 percent after Merrill Lynch
said it expected the bank to make a further $11 billion of
first-quarter writedowns, resulting in a loss of 8.2 billion
Swiss francs ($8.22 billion) in the first three months.
                                
 UBS ended down just 0.4 percent on Monday but has fallen
nearly 50 percent this quarter, bearing the brunt of investor
panic over writedowns.
                                
 The DJ Stoxx bank index <.SX7P> was down 0.7 percent and has
lost nearly 20 percent this year.
                                
 Societe Generale <SOGN.PA> and Standard Chartered <STAN.L>
fell between 2.4 and 3.3 percent, but HSBC <HSBA.L> rose nearly
1 percent after launching private banking services in China.
HBOS <HBOS.L> rose 3.7 percent.
                                
 
                                
 BENCHMARK BATTERED
                                
 The European stock benchmark has lost nearly 17 percent this
quarter, driven by mounting multi-billion dollar writedowns at
the world's top banks as a result of the credit crisis.
                                
 The U.S. Federal Reserve has cut rates by 200 basis points
this year and central banks have been pumping liquidity into the
financial system with the hope of thawing frozen credit markets.
                                
 Book-squaring for the end of the quarter brought the first
fall in the interbank cost of borrowing three-month euros in a
month on Monday, while the cost of borrowing overnight dollars
rose by more than 30 basis points. <LIBOR>
                                
 Further undermining European equities was a widening in
credit spreads, led by a rise in the cost of insuring UBS's debt
against default.
                                
 U.S. Treasury Secretary Henry Paulson said on Monday a
sweeping revamp of the U.S. financial regulatory system was not
intended as a response to market turmoil and should not be
implemented until the difficulties are resolved.
                                
 Around Europe, Germany's DAX index <.GDAXI> was down 0.4
percent and Britain's FTSE 100 index <.FTSE> was up 0.2 percent,
as was France's CAC 40 <.FCHI>.
                                
 On the quarter, the DAX is down 19 percent, the FTSE 100
down 12 percent and the CAC 40 down 16 percent.
                                
 
                                
 TRIAL BOOST FOR ASTRA
                                
 Gainers included BP <BP.L> and Royal Dutch Shell <RDSa.AS>,
which rose between 1.7 and 1.8 percent, while France's Total
<TOTF.PA> gained 0.3 percent as crude oil futures <CLc1> shook
off early weakness to rise above $105 a barrel during market
hours. After hours, oil fell by about 3 percent, below $103.
                                
 British insurer Friends Provident <FP.L> rose 3 percent
after it rejected a cash takeover proposal at 150 pence per
share, valuing it at $7 billion, from U.S. private equity firm
JC Flowers.
                                
 Drugmaker AstraZeneca <AZN.L> rose 2 percent after saying it
was stopping early a clinical trial on cholesterol treatment
Crestor because of its clear benefits over placebo, and as
doubts deepened over the value of Vytorin, a rival drug.
                                
 France's Pernod Ricard <PERP.PA> shed 4.3 percent after
winning a hotly contested auction to buy the maker of Sweden's
Absolut vodka and said the 5.63 billion euro deal would be
financed by a syndicated loan.
 (Additional reporting by Sitaraman Shankar in London and Blaise
Robinson in Paris; Editing by David Hulmes)