* FTSEurofirst 300 index closes 0.7 percent lower
* Banks, telecoms are top losers
* Energy shares track firmer crude, pharma gains on M&A
By Atul Prakash
LONDON, March 9 (Reuters) - European equities ended lower
for a third straight session on Monday as weaker financials and
telecommunications stocks outpaced positive energy shares that
tracked a jump in oil prices.
The FTSEurofirst 300 <> index of top European shares
closed 0.7 percent lower at 657.30 points after setting a fresh
lifetime low. The index has declined 21 percent so far this year
after plunging 45 percent in 2008.
The broader STOXX 600 <> hit levels not seen since
September 1996. It ended 1 percent lower with financials taking
most points off the index, followed by telecom shares.
Among banks, HSBC <HSBA.L> dropped 3.3 percent, Barclays
<BARC.L> was down 5.3 percent, Royal Bank of Scotland <RBS.L>
slipped 4.1 percent, Societe Generale <SOGN.PA> fell 4.3 percent
and UBS <UBSN.VX> was down 5.3 percent.
Worries about the stability of Britain's banks put pressure
on the pound, which hit a six-week low against the dollar.
"As long as you are in a deflationary spiral, nothing will
work. The governments are in a reactive, certainly not in a
proactive mode any more. They will have to come up with
something quite spectacular and convincing," said Luc Van Hecka,
chief economist at KBC Securities.
Further efforts were being made to tackle the worst credit
crisis since the Great Depression of the 1930s, with the
European Union set to back an International Monetary Fund call
for $500 billion to fight the crisis as world stock markets
sank.
Economic gloom spread from Asia to Europe as Japan recorded
its largest current-account deficit and U.S. stocks remained
under pressure on persistent lack of confidence in steps to
shore up ailing banks.
Telecom shares were also under pressure. BT Group <BT.L>
fell 3 percent, Telecom Italia <TLIT.MI> lost 1.2 percent and
France Telecom <FTE.PA> was down 2.8 percent.
Across Europe, the FTSE 100 <> index was up 0.3 percent
and Germany's DAX <> rose 0.7 percent, but France's CAC 40
<> slipped 0.6 percent.
LLOYDS RECOVERS AFTER LOSSES
Lloyds Banking Group <LLOY.L> fell 10 percent early on
Monday after its comment that Britain's requirement for banks to
hold enough capital to withstand a "severe" downturn was key to
its decision to insure 260 billion pounds of risky assets with
the UK government. Its stock closed 4 percent higher.
"With 260 billion pounds put in to the scheme and a 77
percent stake in the beleaguered bank taken by the government,
you can forgive a tumble in the share price," said Jimmy Yates,
head of equities at CMC Markets.
"However the plus point is we now have a figure we can put
to the toxic assets that have been causing so many problems."
Credit Suisse <CSGN.VX> fell more than six percent. Its
chairman Walter Kielholz relinquished his post at Switzerland's
number two bank to become chairman of troubled reinsurer Swiss
Re <RUKN.VX>, which had previously turned to Warren Buffett for
cash after a hefty loss. Swiss Re was down 2.3 percent.
Energy shares tracked crude prices <CLc1> which rose about 2
percent after renewed buying on speculation OPEC may cut output
again at its meeting on Sunday.
BP <BP.L>, Royal Dutch Shell <RDSb.L>, BG Group <BG.L>,
Tullow Oil <TLW.L> and StatoilHydro <STL.OL> rose 2.5-7.9
percent.
Pharma shares were also in demand after U.S. company Merck
<MRK.N> said it would acquire Schering-Plough Corp <SGP.N> for
$41 billion, uniting the makers of cholesterol drugs Zetia and
Vytorin in the second megadeal for Big Pharma in weeks.
AstraZeneca <AZN.L> was up 3.5 percent, Novartis <NOVN.VX>
rose 0.7 percent, Sanofi-Aventis <SASY.PA> gained 2 percent and
Shire <SHP.L> increased 2.2 percent.
Roche <ROG.VX> closed 3.5 percent higher. Analysts said the
company looked likely to seal a deal to buy out U.S. biotech
group Genentech Inc <DNA.N> after the Swiss drugmaker upped its
offer to $46 billion.
(Editing by Dan Lalor)
