European shares fall for tenth session in last eleven

European shares fell for the tenth session in the last 11 yesterday as a relief rally for battered banks was not enough to offset declines in other sectors, notably energy.

The FTSEurofirst 300 index of top European shares fell 0.9 per cent to close unofficially at 767.23 points, its lowest close in two months.

Across Europe, Britain's FTSE 100 and France's CAC-40 fell 0.8 and 0.7 per cent respectively. Germany's DAX rose 0.5 per cent. Wall Street was up slightly around the time European bourses were closing.

Energy stocks were the biggest drag on the index, though crude prices rose more than two per cent to nearly $42 a barrel.

Total, BP, Royal Dutch Shell, BG Group and ENI fell between 2.2 and 4.2 per cent.

Although banks bounced, analysts said their troubles were still the root cause of nervousness in the markets.

"There's so much uncertainty about banks being nationalised and the effect this would have on governments' balance sheets, and credit ratings," said Elin Anden, strategist at Cazenove.

"There are too may macro worries to encourage buying shares," she said. "We might start buying cyclicals, but even that would be a couple of months away."

Deutsche Bank, HSBC, Natixis, Royal Bank of Scotland, Société Générale and UBS rose between 3.6 and 23.3 per cent.

US shares were buoyed by a solid outlook from IBM after markets closed on Tuesday.

Citigroup rose 13 per cent, one of several US banking shares to bounce.

The pan-European index is down 6.8 per cent so far this year after plunging 45 per cent last year, hurt by a financial crisis that began with US mortgage defaults in 2007 and now threatens much of the world with deep and vicious recession.

Banks have been hit hard, with the European sector index touching a 16-year low yesterday.