Euro Shares Close Lower as Bank Rally Evaporates

European shares closed lower on Thursday as a relief rally for banks came to an abrupt end, drugmaker AstraZeneca's results failed to impress, and further evidence of worldwide economic weakness emerged.

The FTSEurofirst 300 index of top European shares fell 1.8 percent to close unofficially at 796.40, following three days of gains. The index lost 45 percent in 2008, hit by a credit crisis that forced banks to make massive writedowns and losses.

"Economic data continues to disappoint," said Georgina Taylor, equity strategist at Legal & General Investment Management. "Some people see it stabilizing, but we don't see that.

"For us, the market is still in a trading range. There will be rallies and setbacks, as opposed to a new bull market. It was a false dawn early this year."

Banks took most points off the index, having staged a vigorous rebound earlier this week.

Swiss bank UBS fell 9.7 percent as traders cited talk of a possible loss of 1 billion Swiss francs ($865.1 million) on trading activities in the fourth quarter. UBS declined to comment.

Lloyds Banking Group fell 12.2 percent, having rocketed more than 50 percent on Wednesday, following positive broker comments from Citi and as fears that the bank would be nationalized receded.

Banco Santander, Barclays, Credit Suisse , Deutsche Bank and HSBC fell between 2.5 and 6.3 percent.

AstraZeneca fell 6.3 percent after the group posted lower fourth-quarter profits, announced 6,000 job cuts and issued a cautious 2009 sales outlook.

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Unemployment data continued to provide evidence of worldwide economic weakness. German unemployment rose by 56,000 on the month in January, its third straight rise and biggest increase in nearly four years.

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 were down between 2 and 2.5 percent.

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