* FTSEurofirst 300 falls 3.7 pct to six-year closing low
* Banks tumble on nationalisation concerns
* UBS down 14 percent, Anglo American falls 17 pct
LONDON, Feb 20 (Reuters) - European shares hit a six-year
closing low on Friday, with investors dumping equities to grab
assets such as bonds and gold as the deepening economic downturn
hit market sentiment and raised fears of bank nationalisations.
Safe-haven buying lifted U.S. gold futures to a seven-month
high above a key psychological level of $1,000 an ounce, while
euro zone government bonds rose after record low readings of
euro zone purchasing managers' indexes.
The FTSEurofirst 300 <> index of top European shares
closed 3.7 percent down at 735.74 points after hitting a low of
736.27 points -- its lowest since early 2003.
Banking stocks suffered the most, with Deutsche Bank
<DBKGn.DE> falling 9.6 percent, Credit Agricole <CAGR.PA>
slipping 9 percent, Royal Bank of Scotland <RBS.L> down 11.5
percent, Dexia <DEXI.BR> dropping 8.4 percent and Commerzbank
<CBKG.DE> falling 8.6 percent.
"When you look at historically poor data, see companies
reporting results considerably below market expectations and
when management teams offer a negative outlook for the rest of
the year, there is no surprise that market confidence continues
to take a battering," said Henk Potts, strategist at Barclays
Stockbrokers.
"Certainly in the first quarter, we anticipate the market to
continue to be very volatile. We are suggesting that the best
strategy is to remain defensive and pick the stocks that have
reliable earnings stream."
Swiss bank UBS <UBSN.VX> hit record lows before closing 14
percent lower on concerns a widening U.S. tax probe will weaken
Switzerland's strict privacy rules and damage the country's
wealth management industry.
Banking shares were hit in other markets too. In the U.S.,
Bank of America Corp <BAC.N> plunged 18 percent, while Citigroup
<C.N> shares plummeted 21 percent.
The FTSEurofirst 300 fell 7.6 percent this week. It is down
more than 11 percent so far this year after tumbling 45 percent
in 2008 on a credit crisis -- the worst since the Great
Depression of the 1930s.
A large number of developed economies, where soaring house
prices fuelled a long-running credit boom, are bearing the brunt
of recessions induced by the abrupt halt to lending as the scale
of bank exposure to high-risk debt began to bite.
"The ongoing flood of bad news has increased the risk
aversion of investors," said Markus Reinwand, equity strategist
at German bank Helaba. "A trigger for a rapid shift in sentiment
is not in sight."
INVESTORS REMAIN WARY
Germany's upper house approved a 50 billion euro ($62.88
billion) stimulus package to help it withstand its worst
recession since World War Two, but investors remained wary.
"In a bear market it's perhaps always easy to postulate
about moving in and cherry-picking keenly priced stocks, but so
long as the overall sentiment remains so entrenched and so
negative, this could well prove to be a hard sell too," said
Paul Webb, head of trading at CMC Markets.
Energy stocks slipped, also under pressure due to a 2.9
percent drop in crude. BP <BP.L>, Royal Dutch Shell <RDSb.L>, BG
Group <BG.L>, Tullow Oil <TLW.L>, Repsol <REP.MC>, Total
<TOTF.PA> and StatoilHydro <STL.OL> were down 2.5 percent to 6.9
percent.
Building material giants Saint-Gobain <SGOB.PA> and Lafarge
<LAFP.PA> fell 15 percent and 2.4 percent respectively after
each announced 1.5 billion euro rights issues as they turned to
investors to buttress them against the impact of the crisis.
Anglo American <AAL.L> fell 17 percent after the miner
scrapped its 2008 final dividend to conserve cash and said it
will cut 19,000 jobs.
AXA <AXAF.PA> plunged for a second consecutive day, down
18.4 percent, as brokers downgraded the stock after the French
insurer posted a second half loss on Thursday.
Swiss Life <SLHN.VX> jumped 8.5 percent after the insurer
said its capital base improved at the end of 2008, easing
investor fears it might need to raise more capital.
Across Europe, the FTSE 100 index <>, Germany's DAX
<> and France's CAC 40 <> were 3.2 percent to 4.3
percent down.
(Additional reporting by Blaise Robinson in Paris, Joanne
Frearson in London and Peter Starck in Frankfort; Editing by
Sharon Lindores)
