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* Royal Dutch Shell slumps after pulling dividend
* Paris shares buoyed by Safran, Airbus jump
* Banks hit by Lloyds Bank, SocGen results
* Euro zone economy shrinks at record rate, worse to come
(Updates to add ECB details)
By Sruthi Shankar
April 30 (Reuters) - European shares fell from seven-week
highs on Thursday after the European Central Bank held back on
big policy moves despite mounting evidence of the damage being
wrought on the euro zone economy by the coronavirus crisis.
Euro zone banks sank 5.1% as the central bank said
it would pay more for banks to borrow from it but otherwise kept
much of its remaining policy powder dry.
The sector also came under pressure from a 8.3% decline in
France's Societe Generale as it reported a quarterly
loss after hiking provisions for bad loans and suffered a
revenue wipeout at its equity trading division.
"Some market participants had expected other things such as
an expansion of quantitative easing. That didn't happen and
explains why markets did not react positively after the
announcement," said Rabobank's head of macro strategy Elwin de
Groot.
"But it does show that the ECB felt it was absolutely
necessary to make it clear that liquidity is there for all
financing institutions."
The central bank reaffirmed its already vast bond purchase
scheme, disappointing some investors who were expecting it to
raise its target and add junk-rated bonds to its shopping list
in the coming months.
Also weighing on the banking sector, the UK's Lloyds Banking
Group became the latest to be hit by provisions against
expected bad loans due to the pandemic, while Danske Bank
swung to a first-quarter net loss, sending its
shares down 3.6%.
European stocks were already under pressure, with oil major
Royal Dutch Shell slumping 10.2% after it cut its
dividend for the first time in 80 years and suspended the next
tranche of its share buyback programme amid a collapse in global
oil demand.
The wider oil & gas sector fell 3.3%
The pan-European STOXX 600 fell 1.2%, while euro
zone stocks were down 1.3%.
A preliminary reading showed economic activity in the bloc
contracted at a record rate in the first quarter and inflation
slowed sharply due to coronavirus-induced lockdowns. Economists
expect even worse numbers for the second quarter.
However, the STOXX 600 is on course to log its biggest
monthly gain since October 2015 as signs of easing restrictions
in several major economies, aggressive stimulus actions and more
recently, hopes of a coronavirus treatment, helped a recovery
from a rout in February
UK's Reckitt Benckiser rose 4.5% as the consumer
giant achieved record sales growth in the first quarter and
predicted a stronger than expected performance in 2020 as
customers stocked up essentials.
Shares in Nokia Oyj gained 4.4% after it eked out
a small profit in the first quarter, backed by demand for its
new high-margin 5G telecoms equipment, and predicted a strong
second half of the year.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Kirsten
Donovan)
