* FTSEurofirst falls 4.9 percent
* Recession worries hit shares
* Banks, energy stocks lead losers
By Brian Gorman
LONDON, Oct 24 (Reuters) - European shares fell to their
lowest close in more than five years on Friday as official data
showed that Europe seemed to be plunging into recession and
bearish company updates intensified investors' fears.
The FTSEurofirst 300 <> index of top European shares
fell 4.9 percent to 829.73 points, its lowest finish since May
2003, having sunk as low as 787.29 earlier in the session.
The index fell 7.3 percent over the week, and has lost 22
percent in October.
Across Europe, Britain's FTSE 100 <>, Germany's DAX
<> and France's CAC-40 <> fell between 3.5 and 5
percent.
Trading volume was more than 4 billion shares, up from daily
volumes of around 3 billion on the first four days of the week.
"I sense we've moved beyond the credit crisis. There's a
recognition of the damage inflicted on the global economy, that
is, the recession, by the credit crisis," said Mike Lenhoff,
strategist at Brewin Dolphin.
"It's not just limited to the developed world. You can run
but you can't hide anywhere."
"These markets are discounting a very severe earnings
recession. Not only have they travelled, but they've arrived.
(The reaction) doesn't seem consistent with what we recognise as
the reality. They're now discounting a deflation, not just a
recession."
Banks took the most points off the index. HSBC <HSBA.L>
slumped 13.5 percent, hit by growing fears of a slowdown in
emerging markets. []
Morgan Stanley contributed to HSBC's fall by cutting its
price target to 580 pence from 630 pence and forecasting a 50
percent dividend cut for 2009.
"The downgrades to HSBC have been a major factor for falls
in the banking sector," said Jim Wood-Smith, head of research at
Williams de Broe. "We are moving to a stage where emerging
market exposure is very bad. If you look at where defaults on
sovereign debt is going to be it is going to be in the emerging
markets somewhere."
Standard Chartered <STAN.L>, also exposed to emerging
markets, fell 15.8 percent. HBOS fell 17.7 percent.
Societe Generale <SOGN.PA> dropped 7.6 percent. Seven French
banks have requested a total of 5 billion euros in loans from a
state refinancing vehicle. []
GLOOM AND DOOM
The economics picture in Europe was gloomy.
The eurozone private-sector economy in October took its
biggest hit since monetary union, and is on track for its worst
performance since the recession of the early 1990s, a survey of
companies showed on Friday.
The October Markit Eurozone Flash Purchasing Managers'
Indexes show services business contracting at its fastest pace
since collapsing after the Sept 11, 2001 attacks. Factory output
is shrinking at its fastest pace in at least a decade.
In Britain, official data showed the economy contracted by
0.5 percent in the third quarter. In Spain, unemployment hit a
four-year high of 11.3 percent.
Some company earnings also furrowed brows.
Automobiles were under pressure, with Peugeot <PEUP.PA>
slipping 1.5 percent after it cut its full-year operating margin
target and said it planned to make "massive" production cuts in
the fourth quarter. It posted a 5.2 percent fall in third
quarter sales. []
Renault <RENA.PA> fell 12.6 percent after saying late on
Thursday it has cut 2008 operating margin target to 2.5-3.0
percent. Its third-quarter sales fell 2.2 percent.
Also hitting the sector was news that the European
commercial vehicle market fell for the fifth straight month in
September due to a significant decline in western Europe.
[]
Energy groups were hammered as crude oil <CLc1> fell more
than 7 percent to just over $63 a barrel, before recovering to
$64.50, as the perceived effects of a prolonged recession more
than outweighed OPEC's announcement that it will cut production
by 1.5 million barrels a day from November 1.
BG Group <BG.L>, BP <BP.L>, Royal Dutch Shell <RDSa.L>,
Total <TOTF.PA> and StatoilHydro <STL.OL> were down between 3.6
and 8.8 percent.
Dutch supermarket group Ahold <AHLN.AS> was one of the few
bright spots, rising 10.7 percent as third-quarter sales rose
3.9 percent to 5.8 billion euros, beating forecasts.
(Additional reporting by Joanne Frearson; Editing by Quentin
Bryar)
