European shares close lower as banks weigh

European shares closed lower yesterday as banks gave back some of their recent gains, though a late rally in commodities prices helped to limit the losses of mining and energy shares.

The pan-European FTSEurofirst 300 index fell 0.8 per cent to 865.11 points, off the day's low of 857.39.

The index had risen for the past three out of four weeks and has gained 34 per cent since hitting a lifetime low in early March.

Across Europe, the FTSE 100 closed 0.8 per cent lower, Germany's DAX fell 1.4 per cent and France's CAC 40 fell 1.5 per cent.

"You'll see that the shares that have gone down today are the biggest winners of the last few weeks," said Ad van Tiggelen, senior strategist at ING Investment Management in Amsterdam. "It's profit taking. I don't think anything specific has happened today - I wouldn't read too much into it. Cyclicals and industrials are going down. Telecoms and pharmas are holding up."

Wall Street was lower as European bourses were closing. The Dow Jones, S&P 500 and Nasdaq Composite were down between one and 1.4 per cent.

Anglo American, BHP Billiton, Rio Tinto, Vedanta Resources and Xstrata fell between two and 4.7 per cent, though metals prices were paring losses by the end of the session.

Lloyds Banking Group closed 7.7 per cent lower after raising just under £3.5 billion (€4 billion) from shareholders, which it will use to pay back some of the money injected by the British government last year.

Banco Santander, Credit Suisse, Deutsche Bank and Société Généralé fell between 1.6 and four per cent. But Swedish banks reversed losses to move sharply higher after Latvia's coalition partners agreed to more budget cuts this year, a key requirement for additional loans from the IMF.

SEB rose 12 per cent while rival Swedbank was up 7.4 per cent.

The DJ Stoxx European banks index fell one per cent, but has more than doubled from its March 9 low.