European shares fall, see worst quarter since Q3 2002

LONDON, March 31 (Reuters) - European shares fell on Monday, securing their worst quarterly performance in over five years, as renewed concern about the credit crunch hit bank stocks and a broker downgrade dragged down Vodafone (VOD.L).

The FTSEurofirst 300 index .FTEU3 of top European shares ended down 0.4 percent at an unofficial 1,260.39 points, bringing its quarterly loss to 16 percent, its worst quarterly performance since the third quarter of 2002 and the fifth monthly fall in a row.

This would be the longest losing streak in the index since a six-month stretch of losses from April to September 2002 and the most volatile month since October 2003.

"You can break the market down into two components. You've got the credit crunch affecting financials and then you've got the economic slowdown," said Kevin Lilley, a portfolio manager at Royal London Asset Management who helps manage 1.1 billion euros.

"We are now five years into this current economic cycle and I just think people's estimates are way, way too high," he said, adding: "It is difficult to see the market making major headway when there are going to be major downgrades coming through."

Around Europe, London's FTSE 100 index .FTSE rose 0.2 percent, bringing its quarterly loss to 11.7 percent, while Frankfurt's DAX .GDAXI fell 0.4 percent, bringing its quarterly loss to 19 percent and Paris' CAC 40 .FCHI rose 0.2 percent, which brought its quarterly loss to 16 percent. (Reporting by Amanda Cooper)