* Top 300 index <> down 1.7 percent
* Sixth straight day of losses, lowest close since March 20
* Financials weigh; high oil price stokes worries
By Peter Starck
FRANKFURT, June 11 (Reuters) - European shares fell on
Wednesday as bank stocks sank on both sides of the Atlantic --
notably Royal Bank of Scotland <RBS.L> in Europe -- and as high
oil prices stoked fears of rising inflation and slower growth.
The FTSEurofirst 300 <> index of top European shares
tumbled 1.7 percent to 1,249.46 points, its lowest close since
March 20.
It has fallen for six straight sessions and lost more than 9
percent in the past three weeks, leaving it just over 4 percent
above the year low set on March 17.
"We are in an environment at the moment where at best we
will have a flat trend with some swings around it," said William
De Vijlder, global chief investment officer at Fortis.
Royal Bank of Scotland (RBS) dropped 9 percent after the UK
bank said results would be held back by the impact of the global
credit crunch, despite current performance and writedowns on
risky assets remaining in line with its previous outlook.
"The global markets business will see lower revenues, group
loan growth will have slowed and the net interest margin will be
under pressure but, importantly, UK credit quality remains
good," NCB Stockbrokers said in a note on RBS.
The DJ Stoxx bank index <.SX7P>, down 2.8 percent, was the
leading sector loser in Europe. British mortgage bank HBOS
<HBOS.L> slumped 11.6 percent to 258 pence, well below its
planned rights issue price of 275 pence per share.
Lloyds <LLOY.L> lost 5.3 percent and Barclays <BARC.L> 4.7
percent. UBS cuts its price targets on HBOS, Barclays and
Lloyds.
Outside Britain, shares in Swiss bank UBS <UBSN.VX> and
French Societe Generale <SOGN.PA> fell more than 3 percent.
"One of our biggest worries at present is the outlook for
the 'originate-to-distribute' business model," Credit Suisse
said in a note on European wholesale banks.
"A great deal of the profitability of the European wholesale
banking sector is built around a business model of originating
assets to distribute them for a fee rather than holding them on
the balance sheet to earn spread income. This could become
significantly more difficult in the future," Credit Suisse said.
SECOND ROUND
In the United States, the S&P 500 financial sector <.GSPF>
sank to a five-year low, led by declines in investment bank
shares on talk of large writedowns at Goldman Sachs <GS.N>. The
bank said it does not comment on market rumours.
"The financial crisis has not been called off; there may be
second round effects with new billion euro losses in the western
banking and finance universe," Norwegian asset managers Skagen
Funds said in a report.
Crude oil futures rose after data showed U.S. crude stocks
declined by 4.6 million barrels last week, more than the 1.1
million barrel decline forecast by analysts.
Energy group BP <BP.L>, up 1.5 percent, was among the day's
few heavyweight gainers in Europe.
Top central bankers have warned repeatedly of the inflation
impact of surging oil prices, raising fears that higher interest
rates may hurt economic growth and corporate profits.
"In the near-term with central banks talking increasingly
'tough' against a backdrop of a weak cyclical picture, equity
markets are likely to face substantial challenges," Goldman
Sachs said in a research note.
Pointing to the same factors and, in addition, rising wage
costs and the weak U.S. dollar <EUR=>, FrankfurtFinanz analyst
Heino Ruland said in a German equity strategy note corporate
profits "will become increasingly threatened."
Around Europe, Britain's FTSE 100 index <> and
Germany's DAX <> both fell 1.8 percent, the French CAC 40
<> lost 2.1 percent, Italy's MIB 30 <> 2 percent,
Spain's IBEX <> 1.3 percent and the Swiss SMI <> 1.6
percent.
Among the few blue chips swimming against the tide, German
chipmaker Infineon <IFXGn.DE> gained 1.7 percent, helped by a
price-target upgrade from ABN AMRO.
"With Apple <AAPL.O> launching the 3G iPhone at an
attractive price point from July 11, we expect Infineon to be a
prime beneficiary," ABN AMRO said in a research note.
(Editing by Quentin Bryar)
