European shares pared losses on Monday after U.S. factory activity slowed less sharply in January with a key gauge of manufacturing improving for the first time since June, according to an industry report, according to Reuters. At 1517 GMT, Europe's FTSEurofirst 300 was down 2 percent at 780.68 points after having traded as low as 769.01. The Institute of Supply Management said its index of national factory activity rose to 35.6 in January from a nearly three-decade low of 32.9 in December, exceeding economists' median forecast for a reading of 32.6. A reading below 50 indicates contraction in the sector. "It's a positive sign because you're not seeing a deepening of the crisis," said Asha Bangalore, an economist at Northern Trust in Chicago. Banks continued to be the weakest sector in Europe, with the DJ Stoxx European banks index, which lost 65 percent last year, falling 4.8 percent. French bank BNP Paribas, which fell 12 percent, took the most points off the index. The shares were hit by its statement that a revised deal to buy assets of stricken Belgian-Dutch financial group Fortis would not boost its core capital ratio. HSBC and Santander, two other heavily weighted banks on the index, fell 3.1 and 3.9 percent respectively. Oil shares were also down, tracking a 50 cent fall in the price of crude to $41.18 a barrel. Total, Shell and BP were 0.2-1.5 percent lower. Trading volumes in Europe were hit by snow storms in London. With just around an hour's trade left, volumes on the FTSEurofirst 300 were 51 percent of their full-day average over a 90-day period.
