Buoyant oil, weak banks knock European shares lower

By Blaise Robinson

PARIS, May 21 (Reuters) - European stocks ended lower on Wednesday, adding to the previous day's sharp losses as oil prices soared past $132 a barrel to a fresh record, heightening inflation fears and concerns for corporate profits.

UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) slid 3.5 percent on concerns over the size of its planned rights share issue. Traders cited market talk that the Swiss lender would have to issue more shares to raise the amount of money it needed because the value of its shares has recently fallen.

The FTSEurofirst 300 index of top European shares closed 0.7 percent lower at 1,340.63 points, its lowest close since May 1.

Oil heavyweights such as BP (BP.L: Quote, Profile, Research, Stock Buzz) and Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) kept UK's FTSE 100 index .FTSE afloat. The index eked out a gain of 0.1 percent on the day while Germany's DAX index .GDAXI lost 1.1 percent and France's CAC 40 .FCHI shed 0.5 percent.

BP gained 3.5 percent, Royal Dutch Shell surged 4.7 percent and Spain's Repsol YPF (REP.MC: Quote, Profile, Research, Stock Buzz) rose 1.8 percent.

U.S. crude oil futures CLc1 surged above $132 a barrel on Wednesday after data showed a sharp drop in U.S. fuel inventories.

"The recent acceleration in the rise of oil prices will have a strong impact on stocks at some point and we're already seeing profit warnings from companies that are big consumers of commodities and energy," said Emmanuel Morano, head of equity management at La Francaise des Placements, in Paris.

Airline stocks, sensitive to oil prices, got hammered. Ryanair (RYA.I: Quote, Profile, Research, Stock Buzz) tumbled 5.1 percent, Air France KLM (AIRF.PA: Quote, Profile, Research, Stock Buzz) shed 3.5 percent and Lufthansa (LHAG.DE: Quote, Profile, Research, Stock Buzz) lost 3.1 percent.