European shares close lower for seventh straight session

European equities slipped for a seventh straight session yesterday as banking stocks struggled to find a floor following mounting sector losses, while energy shares retreated tracking a sharp decline in crude prices.

The FTSEurofirst 300 index of top European shares ended 1.0 per cent lower at 796.32 points after hitting a six-week low at 788.81. It fell 4.3 per cent in Wednesday's previous session and had lost 45 per cent last year.

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 were down between 1.4 and 1.9 per cent.

Banks were the biggest sectoral losers, with Lloyds TSB slipping 11.7 per cent, Commerzbank dropping 10.8 per cent, BNP Paribas shedding 6.6 per cent, HSBC down seven per cent and Barclays down 8.2 per cent.

Shares in Deutsche Postbank plunged 19 per cent amid a rash of downbeat broker notes a day after new terms for the company's takeover by Deutsche Bank were agreed.

"There is a degree of scepticism about the actions that the governments have taken. Markets will probably return to their lows and we will continue to see elevated levels of volatility," said Darren Winder, head of macro and strategy research at Cazenove.

It was an early stage of a downturn in economic activity and the recession was to get deeper and broader before people began to anticipate a recovery, he said.

Misery in the banking sector continued. S. bank JPMorgan Chase said its quarterly profit fell 76 per cent as it wrote down bad loans and set aside more money to cover credit losses at its investment bank.

Citigroup planned to report quarterly results today and analysts are looking for a fifth straight multi-billion dollar loss. It is also expected to provide details of a reorganisation of the company designed to ensure its survival.

A profit warning from Germany's Deutsche Bank on Wednesday and a prediction HSBC may need fresh capital also shook confidence in two major European banks previously credited with dodging the worst of the fallout.