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European shares fall on Fed caution; banks down

LONDON, Dec 15 (Reuters) - European shares fell in early trade on Wednesday after the U.S. Federal Reserve gave a cautious assessment of the strength of the economic economy. Spain's IBEX fell 1.5 percent after ratings agency Moody's said it had put Spain on review for a possible downgrade because of its high funding needs and doubts about its banking sector and regional finances. Banco Santander and BBVA fell 2.7 and 2.2 percent, respectively. At 0816 GMT, the FTSEurofirst 300 index of top European shares was down 0.3 percent at 1,128.67 points, after rising for seven straight sessions, its longest winning run in six months, and hitting its highest close in nearly 27 months. The Fed said the economic recovery was still too slow to bring down unemployment and reaffirmed its commitment to buy $600 billion in government bonds. "The very first line of the very first paragraph is justification for what (the Fed) it's doing -- it talks about a recovery that just isn't strong enough to bring down the unemployment rate," said Mike Lenhoff, chief strategist and head of research at Brewin Dolphin Securities, in London. (Reporting by Brian Gorman) Keywords: MARKETS EUROPE STOCKS/OPEN (brian.gorman@thomsonreuters.com; +44 20 7542 9128; Reuters Messaging: brian.gorman.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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