Europe shares dip; financials show crunch damage

LONDON, Aug 7 (Reuters) – European shares ended Thursday's choppy session down slightly as concern about the reach of the credit crunch offset a potentially supportive shift in market expectations for no more euro zone rate rises this year.

The European Central Bank and the Bank of England left their respective interest rates on hold, as expected. The ECB signalled it was unlikely to raise euro zone rates again any time soon as growth risks had materialised.

But some of Europe's major financial groups including British bank Barclays and German insurer Allianz released results that showed the ongoing damage from the credit crunch.

The FTSEurofirst 300 index of top European shares ended down 0.2 percent at an unofficial 1,190.61 points, having swung between a gain of 0.9 percent and a loss of 0.7 percent.

Barclays shares were among the top gainers within the European banking sector, rising 1.6 percent after the company unveiled more writedowns but beat expectations with its results.

"Generally, the overall tone of the banks had been better. I think not just in the UK but in America too," said Mike Lenhoff, chief strategist and head of research at Brewin Dolphin.

"They haven't been quite as dismal as you might have been led to believe on the back of all the things we know have been going on," he said.

Other European bank shares fell. HSBC lost 1.2 percent, Banco Santander fell 1.7 percent, while Belgian financial services group Dexia lost 10 percent after announcing an overhaul for its loss-making U.S. bond insurance unit.