Banks Lead European Shares Lower

European shares closed down 0.75 percent on Wednesday, pressured by concern that financials may have to reveal more credit crunch-inflicted damage to their earnings.

The FTSEurofirst 300 index of top European shares ended unofficially down 0.75 percent at 1,308.48 points, with banks and pharmaceuticals dragging on the benchmark.

ING fell 2.9 percent, BNP Paribas fell 2.3 percent and Credit Suisse lost 3.4 percent.

"My instinct is that we'll probably be trading around in a rather similarly choppy way in the first quarter until people are confident that their dirty washing has all been revealed," said Andrew Bell, European Strategist at Rensburg Sheppards.

Energy stocks gained after crude oil tipped over $111 a barrel. BP rose 1.6 percent, Total rose 1.3 percent and Shell added 1 percent.

Investors await two key interest rate decisions on Thursday from the Bank of England and the European Central Bank -- the former expected to cut rates by 25 basis points to ease tight lending conditions and bring some relief to the housing market and the latter staying put at 4 percent.

"I think that (analysts' forecasts) is pretty spot on. The easing they've done so far hasn't had a great deal of effect on lending rates," Bell added.