Growth worries take toll on Europe shares

By Ana Nicolaci da Costa

LONDON, March 6 (Reuters) - European shares fell on Thursday as weak U.S. housing data fanned worries about global growth, hurting financial stocks, while a hawkish European Central Bank dashed any hopes the bank might cut rates any time soon. The FTSEurofirst 300 index closed down 1.4 percent at 1,282.90 in a volatile session, mirroring losses across the Atlantic where U.S. stocks struggled with news of a default at a home lender.

Banks were the biggest drag on the index. HSBC (HSBA.L: Quote, Profile, Research), ING (ING.AS: Quote, Profile, Research), BNP Paribas (BNPP.PA: Quote, Profile, Research) and Barclays (BARC.L: Quote, Profile, Research) fell between 2.7 and 4.7 percent, finding little respite from ECB President Jean-Claude Trichet's comments that he would do what was needed on prices in the medium term.

UBS (UBSN.VX: Quote, Profile, Research) closed down 4.7 percent, having earlier trimmed losses after CNBC cited bond manager Pimco denying market talk that it had bought $24 billion of Alt-A investments from the Swiss bank. Pimco officials were not immediately available to comment on the CNBC report while UBS declined comment.

"People still are in a state of uncertainty on the economic front, clearly ahead of tomorrow's key number which will be the non-farm payrolls," said Edmund Shing, a strategist at BNP Paribas in Paris.

The U.S. employment report is due on Friday and investors are nervous after Thursday's data showed the U.S. private sector unexpectedly shed jobs for the first time in nearly five years in February.

In this session, investors grappled with more bad news from the U.S. housing sector after the Mortgage Bankers Association said U.S. home foreclosures and the rate of homes entering the foreclosure process rose to record highs in the fourth quarter.

Also weighing on the U.S. financial sector, Thornburg Mortgage Inc (TMA.N: Quote, Profile, Research), a "jumbo" mortgage lender, said it had received a letter from JPMorgan Chase notifying it of a default after it failed to meet a margin call of about $28 million.

If this was not enough, Dutch insurer Aegon NV (AEGN.AS: Quote, Profile, Research) fell 5.7 percent after posting a 26 percent drop in quarterly net profit to 648 million euros ($984 million), hurt by currency effects and investment writedowns.