By Amanda Cooper
LONDON, March 3 (Reuters) - Banks drove down European shares for a fourth day on Monday as U.S. data did little to dispel concern over the potential for U.S. recession, while HSBC HBSA.L rallied after turning a profit last year.
Financial shares were the worst performers on the broader European market. British mortgage lender HBOS (HBOS.L: Quote, Profile, Research) fell almost 8 percent, while Royal Bank of Scotland (RBS.L: Quote, Profile, Research) shed 3.6 percent and UBS (UBSN.VX: Quote, Profile, Research) lost 3.3 percent.
Nationwide U.S. manufacturing data showed factory activity contracted last month, although not by as much as originally feared, which helped equities recover some of the day's losses.
The FTSEurofirst 300 index dropped 1.3 percent to 1,298.11 points, having fallen by as much as 2 percent earlier in the session.
"The market is absolutely desperate to gauge exactly how quickly the U.S. economy is slowing down and what is the potential threat of inflation," said Henk Potts, a strategist at Barclays Stock Brokers.
HBSC was the top positive weight on the market, rising 3 percent after it reported a 10 percent rise in profit last year, buoyed by growth in Hong Kong and elsewhere in Asia which helped Europe
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