Banks take Europe shares lower; snow thins volumes

* FTSEurofirst ends 2.4 percent lower

* Banks top losers; Barclays, UBS and BNP worst hit

* Heavy snow falls in London thin trading volumes

LONDON, Feb 2 - European shares ended sharply lower on Monday, taken down by big falls in energy and bank stocks like Barclays and BNP Paribas, while data underlined worries about the U.S. economy.

The FTSEurofirst 300 index of top European shares ended down 2.4 percent at 777.28 points, with banks and oils taking most points off the benchmark.

Trading volumes in Europe were hit by heavy snow falls in London. Volumes on the FTSEurofirst 300 were around 70 percent of their full-day average over a 90-day period.

The undertone was weak as U.S. consumers cut spending for a sixth straight month in December and their incomes shrank, according to a government report on Monday that underscored the rapid deterioration of the economy.

And though the Institute of Supply Management said its index of national factory activity rose to 35.6 in January from a near three-decade low of 32.9 in December, analysts said the overall trend was decidedly gloomy.

"We may have some economic statistics that show a slight improvement but the trend is downwards. We expect the U.S. economy to be down 5-6 percent in the first quarter, and that's not good news," said Thierry Lacraz, strategist at Pictet in Geneva.

"We remain relatively cautious on equities and are not overweight in the market despite valuations that are interesting," he added.

Banks continued to be the weakest sector in Europe, with the DJ Stoxx European banks index, which lost 65 percent last year, falling 5.3 percent.

British bank Barclays dropped 10.6 percent after a Moody's downgrade, while French bank BNP Paribas slid 8.7 percent, 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 and 4.5 percent respectively and UBS slid 10.7 percent.

Oil shares were also down, tracking a 60 cent fall in the price of crude to just over $41 a barrel. Total, Shell and BP were 0.5-2 percent lower.

Across Europe, the FTSE 100, Germany's DAX and France's CAC 40 were down 1.5-1.7 percent.

EARNINGS CONCERNS

BP's results are due on Tuesday, and follow Shell's posting of a big fall in fourth-quarter earnings last week.

Analysts said company earnings in Europe increasingly reflected the deterioration in operating conditions.

"People are getting incrementally bearish about the earnings outlook," said Ad van Tiggelen, senior strategist at ING Investment Management, in Amsterdam. "With economies contracting, a 50 percent fall in earnings is realistic."

The FTSEurofirst index's losses in the first trading day of February took its decline for the year so far to over 7 percent after a 45 percent slide last year. It has posted five successive months of losses, punctured by big falls at the banks over credit market ructions and the fear of nationalisation.

"The chances of a bear market rally are increasing," said van Tiggelen. "That's what usually happens when you get one or two pieces of news that are slightly less bad than expected."

Rio Tinto was the standout gainer, up 6.6 percent after it said it had held talks to sell some assets to Chinese government-owned aluminium maker Chinalco, its biggest shareholder, reportedly to cut debt by up to $8 billion.

Irish airline Ryanair gained 5.6 percent after raising its full-year outlook due to lower fuel costs.