European stocks pare losses after Citi Q2

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LONDON, July 18 (Reuters) - European shares pared losses on Friday after Citigroup's (C.N: Quote, Profile, Research) second-quarter results beat expectations, helping soothe some investor concern about the impact of the credit crunch on the financial sector.

By 1043 GMT the FTSEurofirst 300 .FTEU index of top European shares was down 0.2 percent at 1,143.99 points, after having fallen by as much as 1.1 percent earlier.

"The net share loss ... is coming in better than consensus. Citigroup just because of the spread of their business is seen as a barometer of banking sector pretty much as a whole this day, certainly for U.S. banks and also the UK banks, so things aren't as possibly as bad as have been priced in," said Martin Slaney, head of derivatives at GFT Global Markets.

The results spurred on gains among European banking stocks with the DJStoxx European banks index adding 2 percent. HSBC (HSBA.L: Quote, Profile, Research) was up 2.8 percent, making it the largest individual positive influence on the FTSEurofirst, while Royal Bank of Scotland (RBS.L: Quote, Profile, Research) was up 7 percent and BNP Paribas (BNPP.PA: Quote, Profile, Research) was up 3.1 percent.

(Reporting by Patrizia Kokot and Dominic Lau)