* FTSEurofirst 300 down 0.9 percent; hits two-week low
* Banks among top losers on disappointing results
* BoE keeps rates unchanged; ECB rate decision awaited
By Atul Prakash
LONDON, May 5 (Reuters) - European shares hit a two-week low on Thursday as banks fell following disappointing earnings news, with Lloyds slipping on a surprise $5.3 billion provision and Societe Generale missing profit forecasts.
A 6.6 percent rise in the Euro STOXX 50 volatility index, one of Europe's main barometers of anxiety, suggested a decline in investors' appetite for riskier assets, while charts signalled further declines in the near-term, though analysts remained positive on the stock market's longer-term outlook.
At 1108 GMT the FTSEurofirst 300 index of top European shares was down 0.9 percent at 1,124.47 points after touching 1,122.31 -- the lowest since April 20. It hovered below its 50-day moving average -- a near-term bearish signal.
Banks featured among the top losers, with the sector index down 1.5 percent. Lloyds fell 8.7 percent after taking a huge charge to compensate consumers for mis-selling debt repayment insurance policies, while Societe Generale fell 4.8 percent after posting lower than expected first-quarter results.
"The backdrop for banks is more challenging than it was some years ago due to regulatory changes. The earnings trajectory that we expect is not as positive as it used to be and there is some threat of seeing further recapitalisation efforts," said Klaus Wiener, chief economist at Generali Investments.
"Sector wise, banks should be underweighted," said Wiener, whose company manages 330 billion euros ($490.6 billion).
Media shares also fell, with Lagardere down 1.3 percent after Kepler cut its price forecast for the stocks, while France's M6 dropped 0.9 percent as results showed on Wednesday that its sales fell 5.1 percent.
FOCUS ON ECB
The Bank of England kept its key interest rate unchanged at 0.5 percent, as was widely expected after a run of subdued data which has cast doubt on the strength of Britain's economic recovery.
Investors also waited for the outcome of a meeting of the European Central Bank (ECB), with the focus on whether it will signal a rate rise in June.
"While we do not rule out a hike in June, we favour July," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
"The risk associated with a June hike is that by delivering the first two increases in such close proximity markets might overreact, fearing that an aggressive tightening cycle is underway. With wage growth still contained and money and credit growth low, there is no need to rush."
Insurer Zurich Financial Services AG fell 4.2 percent after posting a 32 percent drop in first-quarter profit from a year earlier.
On the positive side, Adidas, the world's second-largest sporting goods company, rose 3.7 percent after raising its sales outlook for the second time this year. (Editing by Greg Mahlich)