* FTSEurofirst 300 index falls 1.6 percent
* Banks top losers as U.S. bailout plan in disarray
* Mining, energy stocks down as commodity prices fall
By Peter Starck
FRANKURT, Sept 26 (Reuters) - European stocks fell early on
Friday led by financials, notably Dutch-Belgian Fortis <FOR.AS>,
as uncertainty persisted over the $700 billion U.S. financial
sector bailout plan and U.S. bank Washington Mutual collapsed.
At 0820 GMT the FTSEurofirst 300 <> index of top
European shares was down 1.6 percent at 1,107.28 points, with
banks <.SX7P> the leading weighted losers.
"It's all revolving around what the U.S. is capable of doing
to get its financial markets functioning normally once again
that is driving the sentiment of traders right now," CMC Markets
said in a note.
Fortis fell 13.4 percent, having dropped to a 14-year low on
Thursday, amid concerns over the group's liquidity, traders
said. Fortis credit default swaps widened by 75 basis points to
425 basis points, they said.
KBC Securities in a note attributed Thursday's slide to
"unfounded speculation", adding that Fortis did not need a share
issue and that "liquidity has never been an issue".
Fortis said it would hold a media briefing at 0930 GMT but
did not plan to make any fresh announcement.
Shares in HSBC <HSBA.L> fell 1.1 percent after saying it was
cutting 1,100 jobs in its global banking and markets operation,
citing "market conditions and the economic environment, and our
cautious outlook for 2009."
Banks were the top weighted losers on the FTSEurofirst 300,
with Credit Suisse <CSGN.VX> down 5.1 percent, rival Swiss bank
UBS <UBSN.VX> 3.7 percent lower and Royal Bank of Scotland
<RBS.L> down 3.4 percent.
Insurers <.SXIP> were also weak, with French AXA <AXAF.PA>
falling 1.9 percent, Swiss Re <RUKN.VX> down 2.4 percent, Dutch
ING <ING.AS> losing 2.4 percent and Germany's Allianz <ALVG.DE>
1.4 percent lower.
ATE Securities in Greece said in a note that the collapse of
Washington Mutual, the largest U.S. savings and loan bank,
served as a reminder of "the continuation of an unprecedented
credit crunch."
Washington Mutual was closed by the U.S. government on
Thursday, making it the largest failure of a U.S. bank, and its
banking assets were sold to JPMorgan <JPM.N> for $1.9 billion.
WEEKEND DEAL?
U.S. congressional leaders were due to try again on Friday
to save the $700 billion Wall Street rescue plan after talks
broke down in acrimony on Thursday.
"Discussions are likely to stretch into the weekend, aiming
for an announcement before Asian markets open on Monday. This
would give a strong boost to equity markets early next week,"
UniCredit UniCredit said in a note.
"Tensions in money and interbank markets would abate from
the current extreme levels, but would not dissipate, as it will
take time for the plan to get underway and clean up the balance
sheets of financial institutions," UniCredit added.
Commerzbank said the U.S. administration would probably
succeed in stabilising the system gradually.
"But the shock has been a severe one, and at the very least
the next few months will see a credit squeeze as banks expand
their lending at a below-average pace. It is also possible that
banks will reduce their lending," Commerzbank said in a note.
Citing tough capital market conditions, the perilous shape
of the U.S. economy and the distinct slowdown in economic growth
in Europe, LandesBank Berlin (LBB) said stock markets would
remain volatile.
"The risk of new lows is not minor," LBB said, adding that
stocks could swing sharply up or down in the near term depending
on the details of the U.S. financial sector bailout package.
The FTSEurofirst 300 hit a three-year low of 1,059.16 in
intra-day trading on Sept. 18.
Away from financials, shares in mobile phone maker Nokia
<NOK1V.HE> fell 4.4 percent to 13.3 euros. JPMorgan lowered its
2009 earnings-per-share estimate for Nokia by 11.6 percent and
cut its price taerget for the stock to 10 euros from 11 euros,
citing a "worsening market".
Energy shares <.SXEP> fell as the crude oil price <CLc1>
dropped more than 2.5 percent towards $105 a barrel. BP <BP.L>
was down 1.6 percent, Royal Dutch Shell <RDSa.L> dipped 1.3
percent and Total <TOTF.PA> traded 1.5 percent lower.
The basic resources sector index <.SXPP>, which includes
miners, fell 2.4 percent as copper prices <MCU3> lost ground.
Xstrata <XTA.L> dropped 4.5 percent, Antofagasta <ANTO.L> shed
3.4 percent and BHP Billiton <BLT.L> traded 2.6 percent lower.
(Editing by Greg Mahlich)
