* HSBC calls on shareholders for $18 bln
* AIG gets another $30 bln equity commitment - sources
* AIG woes pump up dollar on safety buying
* European shares fall as much as 2 percent
By Keiron Henderson
LONDON, March 2 (Reuters) - HSBC launched Britain's biggest rights issue on Monday, calling on shareholders for $18 billion to fix a balance sheet hit by the global financial crisis, while insurer AIG lined up for yet another U.S. bailout.
Europe's largest bank made the cash call at a deep discount to Friday's closing share price after annual profit more than halved as it absorbed the impact of soaring U.S. bad debts.
While European share markets dived on the HSBC rights issue and profit drop, the dollar spiked up after sources said on Sunday the U.S. government was throwing a new $30 billion lifeline to insurer American International Group.
The insurer, struggling to avoid collapse in the fallout of the financial meltdown, approved a new rescue package that includes more lenient terms on a government investment in its preferred shares and a lower interest rate on a government credit line, two sources familiar with the matter said.
The dollar hit a three-year high against a basket of currencies on the bailout news as investors sought safety in holdings of the U.S. currency.
"There's a roll call of reasons to stay risk averse -- the news from AIG, HSBC...," said UBS currency strategist Geoffrey Yu.
AIG LOSS EXPECTED
AIG is on Monday expected to post a fourth quarter loss of $60 billion, the biggest quarterly loss in history and the equivalent of about $460,000 a minute.
The U.S. government has already pledged around $150 billion in an effort to save AIG, once the biggest insurer by market value, whose global reach may have made it too big to fail.
"The government really does not have the option of letting AIG totally blow up," said Robert Haines, senior insurance analyst at CreditSights.
"Hopefully, the third bailout will be the charm," he said. "The counterparties on most of the book are (European) banks that would be hammered if the U.S. walked away."
With or without government help, financial firms are scrambling to improve their balance sheets devastated by investments in toxic debt products linked to the U.S. subprime mortgage market and rising bad debts.
EUROZONE SUFFERING
Purchasing manager index (PMI) data from around Europe showed the weight of the world recession bearing down on the region's economies.
A private survey on Monday showed euro zone manufacturers had their worst month in at least 12 years in February as the recession showed no signs of easing and they cut back jobs.
Markit's euro zone manufacturing purchasing managers' index for February sank to a record low in the survey's history to 33.5 from 34.4 the previous month. That was even a touch lower than the flash reading of 33.6 and as expected by economists.
It is also considerably lower than the 50.0 mark that divides growth from contraction.
The pace of contraction in Germany's manufacturing sector eased last month, but was still at a brisk rate as export orders dried up and the employment index sank to a record low.
France and Italy also witnessed sharp declines in output last month, while Spain showed a hint of stabilisation albeit at a very low level.
"The final Eurozone PMI data are a further disappointment on the earlier flash numbers for February, and indicate that the rate of decline of manufacturing has yet to stabilise," said Chris Williamson, chief euro zone economist at Markit, the data provider.
The data will bolster the chances of the European Central Bank cutting rates again on Thursday as widely expected by financial markets and economists. See
(Reporting by Reuters bureaus worldwide; Additional reporting by Paritosh Bansal and Jason Subler; Editing by Guy Dresser)