European shares closed lower yesterday, extending a losing streak to three days, after US President Obama's plan to stem foreclosures met with scepticism as fears of a deepening recession weighed.
The pan-European FTSEurofirst 300 index of top shares was down 0.3 per cent at 763.36 points at provisional close in a volatile session, having been up as much as 770.14 points and low as 750.88 points.
US President Barack Obama unveiled his much-anticipated plan to fight the US housing crisis, and pledged up to $275 billion to help stem a wave of foreclosures sweeping the country.
"It's another one of these things where just a huge sum of money is being thrown at various sectors of the economy," said Mike Lenhoff, a strategist at Brewin Dolphin.
"We do not really know how effective the whole thing will be. Though it should prevent a bad situation from degenerating into something worse," Mr Lenhoff said.
The banking sector was the biggest gainer on the index, recovering from falls on Tuesday that were sparked by worries over exposure to emerging European countries.
Société Générale gained 2.7 per cent. The group said it would reorganise its investment banking arm, after posting a 2008 loss in the unit, albeit a smaller one than most of its rivals.
HSBC, Banco Santander, and BNP Paribas were up between 1.9 per cent and 2.6 per cent.
Royal Bank of Scotland lost 12.6 per cent on capital raising fears.
Energy stocks took the most off the index as crude touched just below $35 a barrel. BP, which was trading ex dividend, was down three per cent.
BG Group, Galp Energia and Tullow Oil slipped 1.4-1.7 per cent.
French aerospace group Safran lost 11.5 per cent. The group forecasted flat sales and a further operating margin drop this year as it wrestles with a decline in the aircraft industry and currency hits.
Drugmakers were also big sectoral risers on the index as investors took a defensive stance. GlaxoSmithKline, AstraZeneca and Roche were up 0.2 per cent to 1.3 per cent.
Brewers Heineken and Carlsberg gained 2.3 per cent and 2.5 per cent, respectively. The groups, which bought Scottish & Newcastle, last year said they are committed to slashing debt, costs and spending in anticipation of a recession-hit 2009.