Euro Stocks End at 1-Week Closing Low

European stocks lost ground on Wednesday, ending at their lowest closing level in a week, as Washington's fresh banking rescue plan got a lukewarm reception while investors digested a raft of mixed earnings.

Sanofi-Aventis surged 8.1 percent after the pharmaceutical group posted better-than-expected results and investors applauded the company's new growth strategy.

The FTSEurofirst 300 index of top European shares closed 0.3 percent lower at 803.37 points, its lowest closing level since Feb 3.

"As long as we don't get signals that the bottom has been reached for consumer spending and on investment spending, stocks will remain very volatile and stuck in a bear market," said Alexandre Iatrides, fund manager at KBL Richelieu.

"We're still in a downward trend, and the hopes surrounding the U.S. banking rescue plan somewhat eclipsed for a while the negative earnings and macro newsflow. But the plan is not as simple as people had hoped, and the focus is now back on the deterioration of the macro environment as well as on the complete lack of visibility for companies," he said.

U.S. Treasury chief Timothy Geithner on Tuesday unveiled a new bank rescue plan that would put $2 trillion to work mopping up mortgage-related assets and unclogging the credit market.

Shares of banks and insurers were among the biggest losers on Wednesday, with Lloyds dropping 7.9 percent, Natixis losing 7.5 percent and Aegon down 4.1 percent.

AXA dropped 7.2 percent as traders cited market talk that the European insurer would slash its dividend. A spokesman for AXA declined to comment.

BNP Paribas shed 2.1 percent after shareholders of Fortis threw out the state-led deals that carved up their embattled financial group, delivering a blow to BNP Paribas's expansion plans.

"It's not completely over yet but they'll have to start again from scratch. We will know very soon if BNP wants to go ahead," said Kepler Capital Markets analyst Pierre Flabbee.

"On the one hand, BNP will be able to get out of having to finance Fortis and take on its illiquid assets. But the deal had a lot of sense. If it doesn't go ahead, I think it would be a shame," he said.

Also among the biggest drags on the market on Wednesday, French energy group EDF fell 3.3 percent after French daily La Tribune reported that the company has increased a provision to reflect a year-long extension of regulated prices to 1.2 billion euros ($1.55 billion) for 2009 and 2010.

EDF, which is due to report results on Thursday, declined to comment on the report.

On the upside, ArcelorMittal gained 1.1 percent after the steelmaker reported fourth quarter results in line with its own guidance and said it is on track to cut debt by $10 billion this year.

Siemens rose 2.2 percent, boosted by Deutsche Bank's upgrade on the company to "buy" from "hold".

In a note to clients, the brokerage cited Siemens' resilient portfolio and said the engineering conglomerate has the potential to reduce gross costs by about 4 billion euro.

"Industrial demand is falling with unprecedented speed but Energy and Healthcare have different drivers and are very unlikely to collapse, in our view," the brokerage said.

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