* FTSEurofirst 300 index down 2.5 percent in late session
* Spain's IBEX down 5.6 pct, Milan's MIB down 4.6 pct
* For up-to-the minute market news, click on []
By Joanne Frearson
LONDON, May 14 (Reuters) - European shares extended sharp
losses late on Friday, led by banks, on worries that tough new
fiscal austerity measures in the euro-zone's weaker economies
will slow economic growth.
By 1425 GMT, the pan-European FTSEurofirst 300 <>
index of top shares was down 2.5 percent at 1,024.02 points
having earlier fallen as low as 1,016.95.
But the index is still on track to record a weekly gain of
about 5.7 percent after Monday's sharp rally triggered by the $1
trillion emergency rescue package to stabilise the euro-zone.
Banks took a beating on Friday, withthe STOXX Europe 600
banking index <.SX7P> down 4.7 percent. Spanish banks Banco
Santander <SAN.MC> and BBVA <BBVA.MC> fell 7.4 and 6.1 percent
respectively.
"Above all it is lack of confidence in Spain which is
hitting the Spanish market and big banks, along with builders,
have been hurt most for their hefty debt piles," a Madrid-based
trader said.
Spanish builder Sacyr <SVO.MC> fell 6.1 percent and energy,
water and construction group Acciona <ANA.MC> shed 6.2 percent.
French banks Credit Agricole <CAGR.PA> and Societe Generale
<SOGN.PA>, both significantly exposed to Southern Europe, lost
5.5 percent and 7.4 percent respectively.
The euro <EUR=> was also hit hard, dropping to a fresh
18-month low against the U.S. dollar.
Over the past few months, European stocks have been hammered
by escalating fears over the risk of Greek debt problems
spreading to other countries in the region, strongly
underperforming U.S. peers.
So far this year, Greece's ATG index <> has plummeted 25
percent, Spain's IBEX <> is down 21 percent, Portugal's PSI
20 <> down 17 percent, Italy's MIB <.FTMIB> down 14
percent and France's CAC 40 <> down 8.4 percent.
Wall Street's S&P 500 <.SPX> is up 2.3 percent year-to-date.
Greece, Portugal, Ireland and Spain together account for
about 18 percent of euro zone gross domestic product (GDP).
"In the coming months, the market will be hesitating between
sovereign-debt fears and economic-growth fears for the euro
zone," said Claire Chaves d'Oliveira, head of equity management
at Groupama AM in Paris.
"We can't have it both: an economic recovery and reducing
the debt at the same."
A Reuters poll of economists in April gave a median forecast
for euro zone GDP growth of just 1.0 percent this year and 1.5
percent next year, compared to 3.0 percent and 2.9 percent for
the United States. []
(Additional reporting by Rodrigo de Miguel in Madrid; Blaise
Robinson and Juliette Rouillon in Paris; editing by Quentin
Webb)
