* FTSEurofirst 300 closes 0.5 pct lower, well off day's low
* BP falls after cover-up claims
* Miners limit index's losses after upbeat HSBC note
* Banks gain, tracking United States peers
By Brian Gorman
LONDON, May 21 (Reuters) - A late rally for banks prevented
European shares from closing at their lowest in more than eight
months on Friday as the euro zone sovereign debt crisis
persisted, draining investor confidence worldwide.
The FTSEurofirst 300 <> index of leading European
shares fell 0.5 percent to close at 970.00 points, after falling
as much as 3 percent to 946.01 -- its lowest level since early
September.
The index fell 4.4 percent over the week and is down 13
percent from a mid-April high.
German lawmakers backed a $1 trillion safety net to
stabilise the euro but investors worried that Europe's debt
crisis and tougher financial regulation will choke economic
recovery. []
"We're left wondering whether the euro zone bailout package
will be enough as Greece has a lot of interest to pay back on a
quarterly basis, with doubts about whether it can pay," said
Jeremy Batstone-Carr, a strategist at Charles Stanley.
"For market participants, the question is whether we have
simply seen a typical cyclical retracement or are we staring
down the barrel of something much more structural. I think the
latter. By throwing more debt at debt you don't end up solving
the issue."
Bank shares rose in Europe, boosted by U.S. banks gaining a
day after the Senate approved a sweeping Wall Street reform
bill, capping months of wrangling over the biggest overhaul of
financial regulation since the 1930s. []
Barclays <BARC.L>, Societe Generale <SOGN.PA>, Banco
Santander <SAN.MC>, BBVA <BBVA.MC> and UniCredit <CRDI.MI> rose
between 1.8 and 3.8 percent.
Miners also provided some support to the index after HSBC
upgraded Xstrata to "neutral" and reiterated its "overweight"
rating on Rio Tinto. HSBC said proposals to hike tax rates in
Australia were not likely to be implemented in full.
Xstrata <XTA.L> rose 6.4 percent. Others that gained included Anglo American <AAL.L>, Antofagasta <ANTO.L>, Eurasian
Natural Resources Corp.<ENRC.L>, Fresnillo <FRES.L>, Lonmin
<LMI.L> and Rio Tinto <RIO.L>, rising between 2.6 and 4.3
percent.
Stronger metals prices, notably copper, also helped.
BP FALLS
Oil and gas producers <.SXEP> were among the top losers, with
index heavyweight BP <BP.L> falling 4.2 percent after U.S.
politicians accused the company of covering up the true extent
of the oil spill in the Gulf of Mexico.
Others to fall, as crude prices <CLc1> slipped, included
Royal Dutch Shell <RDSa.AS> and Total <TOTF.PA>, down 2.2 and
0.3 percent respectively.
Across Europe, Britain's FTSE 100 <> ended the day 0.2
percent lower, having slipped below 5,000 at one point.
Germany's DAX <> and France's CAC 40 <> fell 0.7
and 0.1 percent, respectively.
Wall Street was higher around the time European bourses were
closing. The Dow Jones <>, S&P 500 <.SPX> and Nasdaq
Composite <> were up between 0.5 and 0.9 percent. U.S.
stocks fell nearly 4 percent on Thursday.
Strategists pointed to the S&P hitting a key technical
support level and then bouncing.
Among other individual movers, Dutch telecoms group KPN
<KPN.AS> gained 2.3 percent after it said it would speed up its
share buyback programme and buy German mobile phone frequencies
in an auction.
(Editing by Karen Foster)
