* FTSEurofirst 300 down 1.2 pct; hits seven-week low
* Banks slip on Spain debt downgrade
* Royal Dutch Shell leads oils higher after profit soars
By Harpreet Bhal
LONDON, April 28 (Reuters) - European shares fell on
Wednesday, with banks weak as worries over the fiscal health of
euro zone peripheral countries intensified after Standard &
Poor's downgraded its debt rating on Spain by one notch.
The pan-European FTSEurofirst 300 <> index of top
shares closed 1.2 percent lower at 1,056.89 points. It hit a
seven-week low at 1,047.78 earlier in the day in a choppy
session as concerns over debt problems in Greece, Spain and
Portugal rattled investors' nerves.
The index tumbled 3.1 percent on Tuesday, the biggest
one-day fall in five months, when S&P slashed Greek debt to junk
status and also downgraded its debt rating on Portugal.
European banks fell, with BBVA <BBVA.MC>, Banco Santander
<SAN.MC>, Barclays <BARC.L> and Deutsche Bank <DBKGn.DE> down
1.4 to 4.7 to percent.
"It seems to be one (downgrade) after the other. Only a few
months ago it looked like it was contained to Greece and in the
last 24 hours we are seeing the contagion effect having a firm
grip across Europe," said Manoj Ladwa, senior trader at ETX
Capital in London.
S&P downgraded Spain to AA from AA-plus, with a negative
outlook, saying a longer-than-expected period of low growth
could undermine efforts to cut the budget deficit.
[]
Greek banks <.FTATBNK>, however, rose 1.7 percent, after the
country's securities regulator said it had banned short-selling
in Greek shares until June 28. []
Equities were also under pressure as investors worried about
delays to an International Monetary Fund/European Union
financial aid package for Greece and how much aid would be
pledged.
A German parliamentary leader of the opposition Greens
quoted IMF boss Dominique Strauss-Kahn as saying the package
would be worth 100-120 billion euros over three years, higher
than the initial package which was worth 45 billion euros
($59.94 billion) for this year.
Strauss-Kahn, however, said nothing had been decided on the
size of aid to Greece. []
Among the biggest fallers in the financial sector, Fortis
<FOR.BR> shed 7.4 percent.
Bucking the weak trend in the sector, Nordea <NDA.ST>, the
Nordic region's biggest bank by value, rose 4.3 percent after
posting better-than-expected first-quarter operating profits and
repeating its forecast for lower risk-adjusted profit this year.
Sweden's Handelsbanken <SHBa.ST> rose 3.9 percent. It
reported a better-than-expected operating profit in the first
quarter as loan losses and costs came in below forecast.
OILS RALLY
On the upside, Royal Dutch Shell rose 2.3 percent after it
reported a 49 percent rise in first-quarter net profit thanks to
higher oil prices and an unexpected return to production growth.
Within the sector, BP <BP.L> and BG <BG.L> 2.5 and 3.9
percent.
Shares Wall Street pared earlier losses, ahead of the
Federal Reserve's decision on interest rates at 1815 GMT. The
central bank expected to hold rates steady and repeat its
low-rate vow. ID:nN27125552]
Britain's FTSE 100 index <>, Germany's DAX <> and
France's CAC 40 <> fell between 0.3 and 1.5 percent.
Spain's IBEX 35 <> index fell 3 percent and Portugal's
PSI 20 <> was down 1.9 percent.
(Editing by Mike Nesbit)
