* FTSEurofirst 300 ends down 1.47 pct
* Worries of more losses, capital raising hit financials
* Steep drop in crude oil hits energy shares
By Amanda Cooper
LONDON, July 8 (Reuters) - Fresh concern about banks'
financing hit European shares on Tuesday, although a drop in the
oil price and an investor sweep into safe-havens like drugmakers
and telecoms helped stem the slide in the broader market.
The banking sector fell to its lowest in five years as fears
of more writedowns and the need for additional capital raising
to restore balance sheets tattered by the credit crunch dented
shares in HSBC <HSBA.L>, UniCredit <CRDI.MI> and others.
The European equities market got some respite mid-afternoon
after Federal Reserve Chairman Ben Bernanke said the central
bank may extend its emergency lending facility for big Wall
Street firms beyond the end of the year, helping soothe some of
the concern about banks' access to funding.
The FTSEurofirst 300 <> index of top European shares
ended the day down 1.47 percent at 1,161.38 points, having
fallen earlier by as much as 2.6 percent.
The index has dropped by about 30 percent from last July's
6-1/2 year highs and has lost 15 percent in the last two months
alone as confidence in the outlook for equities has crumbled
along with the outlook for global economic growth.
Yet some analysts believe there may be some respite to the
selling.
"We're probably close to a bottom, but not the bottom. We're
so bombed out, so oversold that we could gradually work our way
slightly higher. This is not a good moment to sell. We would
sell into a bounce, and sell cyclicals," said Philippe Gijsels,
a European equities strategist at Fortis Bank in Brussels.
Credit Suisse <CSGN.VX> fell 3.2 percent, while in Britain,
Barclays <BARC.L> and Royal Bank of Scotland <RBS.L> fell 1.1 to
3 percent and Alliance & Leicester <ALLL.L> shed nearly 14
percent.
Irish banks Allied Irish <ALBK.I>, Anglo Irish <ANGL.I> and
Bank of Ireland <BKIR.I> were some of the biggest losers in
Europe, falling by 8 to 10 percent.
The DJ Stoxx European banks sector index <.SX7P> has already
fallen 37 percent this year after a 17 percent fall last year
and it is largely because of the banks that the European
equities market has taken such a knock.
"Financials will of course be a big factor because there are
fears of further writedowns when we see earnings next week and
it will keep markets on a back foot," said Cantor Fitzgerald
chief global market strategist Stephen Pope.
OIL SINKS
Crude oil <CLc1> fell by more than $5 a barrel below $140 as
the dollar strengthened against a basket of major currencies
<.DXY> and concern faded about an Atlantic hurricane.
Although this helped temper some concern about the spread of
inflation, the drop put energy stocks under pressure, pushing BP
<BP.L>, Royal Dutch Shell <RDSa.L> and Total <TOTF.PA> down by 2
to 3.4 percent and BG Group <BG.L> and ENI <ENI.MI> down 2.2 to
4.4 percent, making this sector the worst drag on the broader
market.
Britain's FTSE <> was down 1.3 percent, Germany's DAX
<> fell 1.4 percent and France's CAC <> lost 1.5
percent.
Investors will keep a close eye on U.S. second-quarter
results to gauge whether the crisis among financials continues
to spread to other sectors against a backdrop of rising fuel and
raw material costs.
Aluminium producer Alcoa <AA.N> kicks off the U.S.
second-quarter earnings season after Tuesday's closing bell on
Wall Street. Alcoa often acts as a bellwether for demand for raw
materials in the global economy.
With so much concern about the outlook for economic growth
and corporate earnings, investors pushed into perceived
safe-haven equity sectors such as pharmaceuticals and telecoms.
Pharmaceutical stocks were the biggest positive weight on
the FTSEurofirst 300, led by GlaxoSmithKline <GSK.L> and
Novartis <NOVN.VX>, which rose 2.4 to 3.0 percent.
"They have been a bit of a dark horse and now begin to shine
as there is now recognition that as the global population ages
and expands, demand for health strengthens," Pope said.
Confident plans from GlaxoSmithKline to double its research
and development staff in China in the next few years also helped
the sector. Sanofi-Aventis <SASY.PA> and Roche <ROG.VX> rose 0.9
to 2.0 percent.
Among telecoms stocks, Vodafone <VOD.L> rose 1.3 percent,
while Deutsche Telekom <DTEGn.DE> gained 1.4 percent and
Telefonica <TEF.MC> gained 0.6 percent.
(Additional reporting by Patrizia Kokot and Sitaraman Shankar;
Editing by Paul Bolding)
