European shares fell early on Tuesday as banks declined following a huge loss at UBS and miners tracked a drop in key metals prices, while investors trained their sights on a U.S. bank bailout package.
At 0933 GMT, the FTSEurofirst 300 index of top European shares was down 1.4 percent at 818.80 points after closing 0.5 percent higher in the previous session. The index is down 1.5 percent this year after plunging 45 percent in 2008.
Banks took the most points off the index after UBS posted an 8.1 billion Swiss franc ($7 billion) net loss in the fourth quarter, missing forecasts, and said it will cut 2,000 more jobs.
UBS shares were volatile, at one stage falling as much as 3 percent then rising 7 percent as analysts pointed to inflows in the wealth management business in January. By 0959 GMT the stock was flat.
Other banks fell. Credit Agricole was down 2.9 percent, Barclays fell 3.8 percent, Royal Bank of Scotland slipped 4.4 percent and HSBC was down 3.7 percent.
"The markets have been in a state of paralysis waiting for the much anticipated revamping of the U.S. banking bailout. Today's announcement by U.S. Treasury Secretary Tim Geithner will hopefully allow a trend to form, be it up or down," said Chris Hossain, senior sales manager at ODL Securities.
"One can't help but feel that today could be pivotal in dictating the direction for the next 12 months."
Geithner was due to unveil a plan to rescue stricken banks later on Tuesday, while an $800 billion-plus stimulus package was expected to be passed by the Senate but could still face days of wrangling before its final approval.
Governments around the world have already pledged hundreds of billions of dollars to shore up bank capital, cut taxes and fund projects that will create jobs, while central banks have pumped funds into the money markets and slashed interest rates.
But many analyst say the stock markets have not yet bottomed out and there is more room to slip before having some stability in the current economic conditions, the worst since the great depression of the 1930s.
Across Europe, the FTSE 100 index, Germany's DAX and France's CAC 40 were down 1.5-1.6 percent.
COMMODITIES SLIP
Miners retreated with a decline in key base metals prices. Kazakhmys, BHP Billiton, Anglo American, Vedanta Resources, Xstrata, Antofagasta and Rio Tinto fell between 3 and 11 percent.
Energy stocks were also under pressure as crude prices declined. BP, Royal Dutch Shell, gas producer BG Group and Tullow Oil shed between 1.9 and 3.3 percent.
Sweden's Handelsbanken rose 3.4 percent after it posted a much bigger rise than expected in fourth-quarter operating earnings, despite the turmoil in financial markets, as income across the line came in ahead of market forecasts.
Peugeot-Citroen fell 3.2 percent after Christian Streiff, the head of Europe's second-biggest volume carmaker, told a radio channel he expected group sales to fall 20 percent in 2009 and saw further pain in 2010 in what was proving a "catastrophic" phase for the global car industry.
