Banking concerns weigh on world shares

By Natsuko Waki

LONDON (Reuters) - European shares fell and Wall Street was set for a weaker open on Wednesday as concerns about the banking sector weighed, while worries about the euro zone economy kept the euro near a one-month low against the dollar.

Deutsche Bank tumbled 9 percent after saying it has racked up a loss of about 4.8 billion euros (3.3 billion pounds) in the final three months of 2008. HSBC hit a seven-year low after Morgan Stanley analysts said it may need to raise up to $30 billion (20.6 billion pounds) in a rights issue.

Data showed Germany's economy grew at its slowest pace in three years in 2008, with the economy contracting by between 1.5-2.0 percent in the final three months.

"In the first week of the year, people forgot about banks' woes for a moment. But now they are back in the spotlight," said Pascal Decque, analyst at Natixis in Paris.

MSCI world equity index was down 0.16 percent. The FTSEurofirst 300 index of top European shares was down 1.6 percent. U.S. stock futures were down around 0.9 percent, pointing to a weaker open on Wall Street.

Equity investors have struggled to keep a year-end rally going, battered by worries about the state of the global economy and uncertainty about the impact of numerous government anti-recession proposals.

They have, however, settled into something of a trading range with global stocks some 15 to 20 percent above a low reached last November.

"It is still a market driven between hope and fear. On the one hand you have the stimulus packages, (U.S. President-elect Barack) Obama getting into office next week and the ECB hopefully cutting again tomorrow," said Philippe Gijsels, strategist at Fortis Bank.