UPDATE 3-European shares fall from 7-week peak on ECB, earnings upset

(There will be no European stock markets report on Friday, May
1, on account of the Labour Day holiday. Coverage will be
resumed on Monday, May 4.)
* ECB makes credit cheaper for banks, reaffirms bond
purchase
* Royal Dutch Shell slumps after pulling dividend
* Banks hit by Lloyds Bank, SocGen results
* Euro zone economy shrinks at record rate, worse to come
* STOXX 600 up 6.2% in April, best month since Oct 2015

(Updates prices to close)
By Sruthi Shankar and Susan Mathew
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 .SX7E sank 5.5% 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. "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 ECB 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.
The banking sector also came under pressure from a 8.6%
decline in France's Societe Generale SOGN.PA as it reported a
quarterly loss, while Britain's Lloyds Banking Group LLOY.L
became the latest to be hit by provisions against expected bad
loans due to the pandemic.
Along with a slide in energy stocks as oil major Royal Dutch
Shell RDSa.L slumped 10.8% on cutting its dividend for the
first time in 80 years, London's FTSE .FTSE dived 3.5%. The
index logged its steepest one-day loss in one month.
The wider oil & gas sector .SXEP fell 3.4%
The pan-European STOXX 600 .STOXX fell 2% after a
three-day rally, while euro zone stocks .STOXXE were down
1.9%.
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 logged 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 RB.L rose 3.6% 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 of BE Semiconductor BESI.AS topped the STOXX 600
after the Dutch company forecast a rise to second quarter
revenue.