European shares fall early; Lloyds, HSBC slide

                                
 * FTSEurofirst 300 index down 1.8 pct
                                
 * Lloyds falls as UK plans to raise stake
                                
 * HSBC short-sellers dump stock
                                
 
                                
 By Joanne Frearson 
                                
 LONDON, March 9 (Reuters) - European shares fell early on
Monday, as banks slipped on a plan to raise the UK government's
stake in Lloyds Banking Group <LLOY.L> and as HSBC <HSBA.L>
short-sellers dumped its stock.
                                
 By 0941 GMT, the pan-European FTSEurofirst 300 <.FTEU3>
index of top shares was down 1.8 percent at 650.25 points, while
the broader STOXX 600 <.STOXX> was down 1.9 percent at 156.55
points, after earlier hitting its lowest level since September
1996.
                                
 "With HSBC there are worries about credit quality ...  There
is not a whole lot that is bright news out there anywhere today.
There are doubts everywhere that policy response can not
actually stabilise the global economy," said Bernard McAlinden,
strategist at NCB Stockbrokers.
                                
 Banks were the major losers, with Lloyds down 14 percent
after it said over the weekend the British government would get
a stake of up to 77 percent in the bank after agreeing to
underwrite 260 billion pounds of risky assets.
                                
 "With Lloyds the issue is the government has ownership but
not control, so it does not resolve the underlying problem. The
government really cannot push through policy, and it is possible
this could be a step towards full nationalisation or (the)
suspension of shares, as per Northern Rock," said Justin
Urquhart Stewart, director at Seven Investment Management.
                                
 HSBC <HSBA.L> lost 11 percent as short sellers dumped the
stock in anticipation of buying back after the bank completes
its $17.7 billion rights issue.
                                
 Credit Suisse <CSN.VX> fell 3.9 percent after the group and
Swiss Re <RUKN.VX> both announced a shake-up of their boards,
with Credit Suisse's Walter Kielholz to become chairman at Swiss
Re and Hans-Ulrich Doerig to take the same position at Credit
Suisse. [ID:nL9510876]
                                
 Swiss Re was down 0.6 percent. 

                                
 FORTIS GAINS ON REVISED BREAK UP TERMS
                                
 Fortis <FOR.BR> gained 22 percent after the Belgium
government and BNP Paribas <BNPP.PA> revised the terms of the
break-up of the financial group. [ID:nL792646]
                                
 However, BNP Paribas <BNPP.PA> was down 0.4 percent.
                                
 Deutsche Bank <DBKGn.DE> was 0.8 percent higher after
Germany's largest bank said it booked revenues in February that
confirmed a positive trend seen in January. 
                                
 Roche <ROG.VX> was up 0.2 percent after the group raised a
$45.7 billion bid to buy out U.S. biotech group Genentech
<DNA.N>.
                                
 UK-based oil explorer Tullow Oil <TLW.L> was 6.8 percent
higher after it said it had secured a $2 billion loans package
that will finance the development of its large oil finds
offshore Ghana, as it announced another find in the West African
country. [ID:nL9171489]
                                
 Elsewhere in the energy sector, BG Group <BG.L>, Royal Dutch
Shell <RDSa.L> and Total <TOTF.PA> were down between 1.5 and 2.6
percent, while crude hovered at around $45 a barrel <CLc1>.
                                
 Across Europe, the FTSE 100 <.FTSE> index was down 1.6
percent, Germany's DAX <.GDAXI> was 1.7 percent lower and
France's CAC 40 <.FCHI> was down 2.2 percent.
                                
 (Reporting by Joanne Frearson; editing by Simon Jessop)
  (joanne.frearson@thomsonreuters.com; +44 207 542 2773, Reuters
Messaging:joanne.frearson.thomsonreuters.com@reuters.net)