By Amanda Cooper
LONDON, Feb 29 (Reuters) - European shares fell for a third
day on Friday as another swathe of shockingly weak U.S. data
deepened fears of recession, hitting the banking sector, while
insurer Swiss Re <RUKN.VX> rallied after its results.
Banks were the largest drag on the broader European market,
with Barclays <BARC.L> falling 4.7 percent, BNP Paribas
<BNPP.PA> losing 3 percent and Swiss bank UBS <UBSN.VX>, the
biggest victim of the credit crisis among major European banks,
down 3.7 percent.
A drop in U.S. consumer confidence to a 16-year low, along
with a contraction in business activity in the auto-intensive
U.S. Midwest region added to investors' conviction the U.S.
economy is heading for recession.
The FTSEurofirst 300 index <> of top European shares
fell 1.4 percent to 1,315.28, bringing losses for February to
more than 1 percent and marking the fourth consecutive monthly
decline.
"This is confirmation that things are slowing down really,"
Mark Bon, a fund manager at Canada Life who manages a portfolio
of continental European stocks, said of the U.S. data.
"Unfortunately at the moment, the earnings are not
deflecting people's attention away from the big macro issues in
the States, so those are still taking centre stage."
Shares on Wall Street were down by nearly 1.8 percent after
the data and after American International Group Inc <AIG.N>,
posted the worst loss in its history, which suggested problems
in the credit markets are far from over.
The FTSEurofirst 300 has lost about 10 percent so far this
year as data from the United States has become increasingly
bleak, clouding the outlook for European corporates.
SWISS RE GAINS
Shares in Swiss Re, the world's largest reinsurer, were the
top positive weight on the broader European market, rallying 5.2
percent after it posted a smaller-than-expected 9 percent drop
in 2007 net profit and booked only modest further subprime
writedowns.
"We've seen banks rally strongly off the lows that they
reached earlier this month. The reporting season generally has
perhaps not produced as many negatives as people had feared,
particularly in the UK banks," said Darren Winder, head of macro
and strategy research at Cazenove.
Germany's Allianz <ALVG.DE> was one of the worst drags on
Germany's DAX index <>, falling 3.2 percent, while Italy's
Assicurazioni Generali <GASI.MI>, Europe's number-three insurer,
dropped 1.8 percent.
"We're still digesting the general picture we've been left
with from the reporting season and unfortunately that's not
really addressing any deeper questions or issues that investors
have," Winder said.
Warnings from Federal Reserve Chairman Ben Bernanke on
Thursday that the troubled housing sector may lead to small-bank
failures knocked stock markets globally.
Around Europe, Germany's DAX <> fell 1.7 percent,
France's CAC 40 <> was down 1.5 percent and Britain's FTSE
100 index <> dropped 1.4 percent.
On the upside, Belgian brewer InBev <INTB.BR> powered to its
highest in over three months, rising 3.4 percent after
Thursday's strong 2007 results and dividend.
Other gainers included Vodafone <VOD.L>, which edged up 0.8
percent after a broker upgrade, while shares in British insurer
Resolution <RSL.L> rose 3.1 percent after rival Pearl confirmed
its previous commitment to the 4.9 billion deal to take over the
company. A string of delays had prompted speculation the deal
could be derailed.
(Additional reporting by Golnar Motevalli; Editing by Quentin
Bryar)
