* FTSEurofirst 300 falls 1.2 percent
* Banks, commodities take most points off index
* Tesco jumps 7 percent on sales update
By Sitaraman Shankar
LONDON, Dec 2 (Reuters) - European shares fell early on
Tuesday, led by banks and commodity shares, and adding to the
previous session's slump as nervous investors digested news of
more global central bank action to rescue weakening economies.
At 0855 GMT, the FTSEurofirst 300 index <> index of
top European shares was down 1.2 percent at 800.21 points,
extending Monday's 6 percent fall.
Banks and oils took the most points off the index on
Tuesday.
HSBC <HSBA.L> was the top-weighted loser, falling 2.8
percent, while Banco Santander <SAN.MC> lost 1.7 percent and BNP
Paribas <BNPP.PA> fell 3.4 percent.
Oil <CLc1> fell nearly 3 percent to trade below $48 a
barrel, sending shares in BP <BP.L> down 1.2 percent, BG <BG.L>
down 3.8 percent and Total <TOTF.PA> down 1.4 percent.
Analysts said tough times lay ahead.
"Equities will have a rough ride at the start of December,
and this will continue until we see a ray of hope on the macro
side," said Franz Wenzel, strategist at AXA Investment Managers
in Paris.
"There's no help from valuations in this environment, and I
don't expect a year-end rally. I believe we saw one in the last
two weeks but that is melting like the snow in the sun."
Underlining the tough macro environment, the Reserve Bank of
Australia cut its cash rate by 100 basis points and the Bank of
Japan moved to ease an acute cash crunch for companies.
The European Central Bank and the Bank of England are due to
announce rate decisions on Thursday.
Wenzel said he expected the ECB to cut by 75 basis points,
or even 100.
"I wouldn't be surprised if they went for 100 basis points
to signal a red alert, and that would provide a ray of hope," he
said.
Across Europe, Britain's FTSE <> fell 1 percent,
Germany's DAX <> lost 0.8 percent and France's CAC <>
shed 1.1 percent.
Benchmark U.S. Treasury yields traded near five-decade lows
after a big market rally the previous day when Federal Reserve
Chairman Ben Bernanke signalled that the central bank could buy
government and agency bonds.
ROUNDING OFF A TERRIBLE YEAR....
The FTSEurofirst 300 has fallen 7.9 percent in the first two
trading days of the month, suggesting that December will round
off in similar vein what has been a horrific year for equities.
The index fell 7.2 percent in November, held up slightly by
a mini-rally, but it lost nearly 13 percent in October and 11
percent in September.
It has fallen for nine of the last 11 months, and is down 47
percent on the year after posting gains in every year over the
period 2003-2007.
The equities sell-off was sparked by a meltdown in risky
U.S. mortgages. This led to massive losses at big banks and
tipped leading economies into recession.
The U.S. National Bureau of Economic Research's business
cycle dating committee said that the U.S. economy slipped into
recession in December 2007.
Shares in mining groups, considered hostage to economic ups
and downs, fell sharply.
Rio Tinto <RIO.L>, Xstrata <XTA.L> and BHP Billiton <BLT.L>
fell 5-6 percent.
British retailer Tesco <TSCO.L> rose 7 percent after the
company met forecasts with a 2 percent rise in underlying UK
sales and said its new discount range was helping boost sales
volumes and customer numbers.
(Reporting by Sitaraman Shankar; editing by John
Stonestreet)
