* FTSEurofirst 300 closes 1.6 percent lower
* Euro zone banks fall
* Automakers feature among top decliners
By Brian Gorman
LONDON, Nov 29 (Reuters) - European shares hit their lowest
close in nearly eight weeks on Monday, after an 85 billion euro
($112 billion) bailout deal for Ireland failed to allay concerns
the euro zone debt crisis could spread to other countries.
The FTSEurofirst 300 <> index of top European shares
fell 1.6 percent to 1,069.24 points, its lowest close since Oct.
5. The index is down 4.6 percent from a two-year peak it hit
three weeks ago, when it was buoyed by investors' focus on
quantitative easing and strong corporate earnings.
Heavyweight euro zone banks were among the biggest losers.
BNP Paribas <BNPP.PA>, BBVA <BBVA.MC>, Deutsche Bank
<DBKGn.DE> and Societe Generale <SOGN.PA> fell 3.0-4.7 percent.
"The market has lost faith completely with European and
political leaders and is now actively looking for the next
domino to fall," said Jeremy Batstone-Carr, strategist at
Charles Stanley.
"We have had no real salvation over the course of the
weekend."
Irish bank shares rose despite the prospect the state will
own more of the top two lenders. Allied Irish Banks <ALBK.I> and
Bank of Ireland <BKIR.I> rose 3.8 percent and 15.5 percent
respectively.
Bank shares are effectively caught in the middle of a battle
between governments and bond markets that is at the heart of the
crisis, analysts said. []
Batstone Carr said companies, across all sectors, were
likely to suffer derating. "Investors do not believe in the
sustainability of the earnings and margins tend to mean
revert...they will ascribe a low degree of confidence to the
corporate sector."
The euro fell to two-month lows against the dollar <EUR=>.
The spreads between Italian and Spanish 10-year government
bonds and their German equivalent widened to a euro-lifetime
high. []
The cost of insuring Portuguese and Spanish debt against
default rose to a record high after a tepid Italian auction
result, while Portugal's economic climate indicator fell for the
second straight month in November. []
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
TAKE A LOOK- Europe's debt problems []
Euro zone debt struggle http://link.reuters.com/dah65q
Euro zone debt graphic http://r.reuters.com/hyb65p
Interactive timeline http://link.reuters.com/nyx95q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Across Europe, Britain's FTSE 100 <>, Germany's DAX
<>, France's CAC 40 <> fell 2.1-2.5 percent.
The Thomson Reuters Peripheral Eurozone Countries Index
<.TRXFLDPIPU> fell 3.2 percent.
Spain's IBEX <>, Portugal's PSI 20 <>, Italy's
FTSE MIB <.FTMIB> fell 2.2-2.7 percent. Ireland's ISEQ <.ISEQ>
fell 0.4 percent.
OILS FALL
Energy shares were also among the casualties, though crude
prices <CLc1> held up, topping $87, supported partly by cold
temperatures across Europe.
Total <TOTF.PA>, Royal Dutch Shell <RDSa.L>, Repsol
<REP.MC> and BG <BG.L> fell 1.7-3.2 percent.
BP <BP.L> fell 1.8 percent. The company has agreed to sell
its stake in Argentina-based oil and gas group Pan American
Energy to Bridas Corp for $7 billion. []
Automakers fell on worries that a slow economic recovery
could hurt demand. Daimler AG <DAIGn.DE>, Porsche <PSHG_p.DE>
and Renault <RENA.PA> fell 3.2-4.1 percent.
Wall Street was lower around the time European bourses were
closing. The Dow Jones <>, S&P 500 <.SPX> and Nasdaq
Composite <> were down 0.9-1.1 percent.
Steelmaker Thyssenkrupp <TKAG.DE> fell 3.7 percent, ahead of
results on Tuesday.
Editing by Jane Merriman
($1 = 0.7606 euro)
