Weak banks push Europe shares to 1-mth closing low
* FTSEurofirst 300 down 1.2 pct, hits 1-month closing low
* Financials among top losers, UBS slips 5.8 pct on results
* Energy, mining shares fall; automaker BMW down 6.3 pct
By Atul Prakash
LONDON, Nov 3 (Reuters) - European shares hit a one-month closing low on Tuesday as disappointing results from Swiss lender UBS (UBSN.VX) and a move by Britain's Royal Bank of Scotland (RBS.L) to join a government scheme hurt financials.
The FTSEurofirst 300 .FTEU3 index of top European shares ended 1.2 percent down at 968.93 points, the lowest closing level since early October. The index, which slumped 45 percent last year, is still up 16 percent in 2009 and has surged 50 percent since hitting a record low in early March.
The VDAX-NEW volatility index .V1XI rose to a six-week high. The higher the index, which is based on sell and buy options on Frankfurt's top-30 stocks <0#.GDAXI>, the lower is the desire for risk.
Financials were among the biggest losers. The DJ STOXX European bank index .SX7P, which has spiked 150 percent since hitting a floor in March, was down 3 percent after touching its lowest level since mid-August.
"People are worried about the banking sector once again because we have had a couple of European results that were somewhat worse than expected," said Luc Van Hecka, chief economist at KBC Securities.
"In this market, once you have had a run up of about 60 percent, it's nothing unusual that you get some temporary corrections and it could be easily 10 to 15 percent. But fundamentals are still such that this will not go too far."
UBS fell 5.8 percent after higher-than-expected accounting charges pushed it into its fourth consecutive quarterly loss and disappointing net withdrawals of 36.6 billion Swiss francs ($36 billion) at its key wealth and asset management business.
A shake-up of British banks -- Royal Bank of Scotland and Lloyds Banking Group (LLOY.L) -- and the European Commission's estimates after results of stress tests in the banking sector showing losses could amount to 400 billion euros ($590.9 billion) in 2009-2010 raised questions about the sector. [ID:nL3540088]
RBS was down 7 percent after hitting a six month low earlier in the session. It said it would join the government's asset protection scheme (APS) which is designed to insure riskier loans and accept punitive disposals and caps on its activities.
Lloyds, however, gained 2.7 percent on relief that a record 13.5 billion pound ($22 billion) rights issue would mean it can stay out of the government scheme.
Other banks were also down, with Standard Chartered (STAN.L), HSBC (HSBA.L), Barclays (BARC.L), BNP Paribas (BNPP.PA), Societe Generale (SOGN.PA), Credit Agricole (CAGR.PA) and Bank of Ireland (BKIR.I) falling 1.8 to 11.8 percent.
