Reuters Europe shares fall; banks and pharmas slide

Fri Feb 27, 2009 12:48pm EST
* FTSEurofirst 300 closes 1.8 pct lower

* Index falls 9.7 pct in February

* Drugmakers fall on U.S. budget worry

* Lloyds leads British banks lower

By Brian Gorman
LONDON, Feb 27 (Reuters) - European shares fell on Friday as the U.S. government struck a deal to take a sizeable stake in Citigroup (C.N), the U.S. budget plans raised worries over drugmaker earnings and a big loss at Lloyds hit British banks.
The FTSEurofirst 300 .FTEU3 index of top European shares fell 1.8 percent to 719.4 points.

Over the week, the index slipped 2.2 percent, and it fell 9.7 percent in the month of February, on continued worries over the global slowdown and the crisis in the banking system.

"Citigroup was the main thing today," said Howard Wheeldon, strategist at BGC Partners in London. "Even though everybody knew it's been coming for a while." "It's a creeping step towards full nationalisation," he said.

The U.S. government will boost its stake in Citigroup Inc (C.N) to as much as 36 percent, bolstering the banking giant's capital base in one of the most dramatic efforts yet to prop up the ailing banking industry. Citigroup reported a full-year loss of $27.7 billion. Its shares fell more than 30 percent.

The STOXX 600 .STOXX, a broader index of European shares, fell 1.8 percent, with banks taking the most points off the index.

UK banks were worst hit, led by Lloyds Banking Group (LLOY.L), which closed 22.3 percent lower after it unveiled a big loss for 2008 and said it had not yet finalised details of its plan to put billions of pounds of assets into a UK government-backed insurance scheme. Barclays (BARC.L) tumbled 17.4 percent, HSBC (HSBA.L) fell 6.8 percent, ahead of results on Monday. more...