Financials, Commods Drag Euro Shares Lower

European equities fell 1.3 percent on Monday as persistent concerns about losses at banks hit financial stocks, while commodity shares tracked weaker base metals and crude oil prices.

The FTSEurofirst 300 index of top European shares provisionally ended 10.60 points lower at 785.90 in thin trade, with U.S. markets closed for the President's Day Holiday and UK volumes lighter due to school mid-term holidays.

Banks took the most points off the index, with Royal Bank of Scotland slipping 6.9 percent, Deutsche Bank dropping 6.5 percent, Commerzbank shedding 6.8 percent and UniCredit falling more than 8 percent.

Lloyds ended 8 percent lower after falling about 20 percent earlier in the session. On Friday, its shares fell more than 30 percent on the back of a profit warning that revived concerns it could need more state funds or be nationalised due to deepening problems at HBOS, which Lloyds bought last month.

"There is no clear view on whether you have already reached the bottom," said Luc Van Hecka, chief economist at KBC Securities.

"There is clearly a threat that banks will be under pressure to sell off some of the assets at depressed prices."

Energy shares tracked crude oil prices which fell 1.5 percent. BP, Royal Dutch Shell, BG Group, Tullow Oil, Repsol, Total and StatoilHydro shed between 0.8 and 2.3 percent.

Across Europe, the FTSE 100 index, Germany's DAX and France's CAC 40 were down 1-1.3 percent.

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