Financials dragged lower by HSBC rights, AIG results

[Joanne98]

LONDON, March 2 (Reuters) - European shares were lower at midday on Monday, led by financials after American International Group reported a $61.7 billion quarterly net loss and HSBC announced Britain's largest ever rights issue.
By 1143 GMT, the pan-European FTSEurofirst 300 index of top shares was down 4 percent 691.05 points trading at a six year low and just off a lifetime low of 681.17 points. "Everyone had lingering hopes that by the time we were moving towards the end of the first quarter there would be signs the banking industry and world economy would be stabilizing and the pace of declines would be lessening. However, it appears the downward trend is picking up pace," said Jim Wood-Smith, head of research at Williams de Broe.
Banks were the biggest fallers on the index. HSBC lost 19.6 percent as it launched a 12.5 billion pound rights issue after annual profits more than halved.
Sandy Chen, analyst at Panmure Gordon, said: "We interpret HSBC's move as a signal that management does not expect a recovery in global macro for a long time. In HSBC, we see vulnerability to the collapse in world trade and rising balance sheet risk."
UBS fell 7.1 percent after its new chief executive was quoted as saying it could take two to three years to bring it back to making a sustainable profit.
Banco Santander, BNP Paribas and Credit Suisse were down 7.6 to 9.2 percent.
Insurers were also in the doldrums on concerns they may need to raise capital through rights issues.
Axa, Allianz and Swiss Re fell 4.4 to 7.6 percent.
AIG's $61.7 billion fourth-quarter loss was the largest quarterly loss in U.S. corporate history and is its fifth consecutive quarterly loss, bringing total losses over that period to $100 billion.
AIG shares in Frankfurt were up 7.5 percent, lifted by the bailout news

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