* FTSEurofirst 300 tumbles 6.8 pct, part of global slide
* Index hits lowest level since July 2003
* Oil stocks plunge as crude declines sharply
By Rebekah Curtis
LONDON, Oct 10 (Reuters) - European stocks tumbled nearly 7
percent early on Friday, swept into a global panic sell-off as
investors feared world governments' efforts to thaw credit
markets would fail to ward off a global recession.
Fragile banks led the decline, with Barclays <BARC.L> off
9.6 percent and Santander <SAN.MC> down 7.1 percent. HBOS
<HBOS.L>, a standout faller in Europe, dropped 13.7 percent.
Oil shares also tumbled, with BP <BP.L> and Royal Dutch
Shell <RDSa.L> down 5 and 5.9 percent respectively as crude fell
4.3 percent.
At 0910 GMT, the pan-European FTSEurofirst 300 index
<> was down 6.8 percent at 858.86 points, after falling
more than 9 percent in early trade and hitting its lowest level
since July 2003.
The index has fallen more than 21 percent so far this week,
on track for its worst week on record, in a credit crisis that
has frozen interbank lending, hammered banks and slowed the
global economy.
European shares have dropped about 43 percent in the year to
date.
World stocks slumped to their lowest levels in five years on
Friday. Measures from the United States, Britain and other
countries to fight the worst financial crisis in 80 years --
even this week's coordinated interest rate cuts -- have failed
to calm credit and money markets and quell investor fears.
Finance chiefs from the Group of Seven rich nations meet in
Washington later on Friday to discuss how to stem the crisis.
"The steps that have been taken thus far have yet to prove
their worth," said Mike Lenhoff, chief market strategist at
Brewin Dolphin in London.
"The bears are in their element at the moment," he added.
"It's as if the financial system has lost its capacity to
function."
Britain's FTSE 100 <> lost 5.5 percent, France's CAC
<> lost 6.5 percent and Germany's DAX <> shed 8.2
percent. The major national indexes earlier fell as much as 10
percent.
Japan's Nikkei 225 <> fell nearly 10 percent on Friday,
while Wall Street's Dow Jones industrial average <> shed
more than 7 percent on Thursday.
Investors blamed the slide in U.S. stocks on Thursday on the
expiry of a ban on short-selling of financial stocks, there was
intense speculation on whether U.S. authorities would extend the
restrictions.
DEFENSIVES SLIDE
Even traditionally defensive stocks failed to offer
investors shelter in the stricken European market. Utilities
tumbled, with E.ON <EONGn.DE> the biggest individual negative
weight in Europe, off 11 percent.
GDF Suez <GSZ.PA> shares dropped 8 percent, extending
Thursday's 13 percent fall after Belgian energy minister Paul
Magnette told Le Soir newspaper of plans to cap electricity
prices at subsidiary Electrabel.
Pharmaceutical stocks, usually seen as defensives, were not
spared: AstraZeneca <AZN.L> was down 5.5 percent,
GlaxoSmithKline <GSK.L> off 6.1 percent and Novartis <NOVN.VX>
down 5.7 percent.
Heavyweight stock Vodafone <VOD.L> dropped 7 percent.
Miners took a whipping as copper <MCU3=LX> plunged 9
percent, with Rio Tinto <RIO.L> slumping 12 percent, BHP
Billiton <BLT.L> down 10 percent and Anglo American <AAL.L>
losing 8.7 percent.
Equity trading in Russia, Austria, Iceland, Romania, Ukraine
and Indonesia was halted while nearly half of Milan stocks were
suspended for excessive losses.
"It's just a panic ... investors are deciding: 'This is the
time at which were going to throw in the towel'," said Peter
Dixon, an economist at Commerzbank in London. "As one of my
colleagues said: 'Game over please insert coins'."
(Editing by Paul Bolding)
