Europe stocks extend losing run on economic jitters

                                
 * FTSEurofirst 300 down 0.5 pct, down 1.4 pct on the week
                                
 * Euro STOXX 50 breaks key support level
                                
 * Dana surges on KNOC hostile bid, BG up on bid talk
                                
 * For up-to-the-minute market news, click on [STXNEWS/EU]
                                
 
                                
 By Blaise Robinson
                                
 PARIS, Aug 20 (Reuters) - European stocks fell in early
trade on Friday, down for the third straight day and tracking
U.S. and Asian losses after poor U.S. data brought fears of a
double-dip recession back to the forefront of investors' minds.
                                
 At 0900 GMT, the FTSEurofirst 300 <.FTEU3> index of top
European shares was down 0.5 percent at 1,031.92 points, on
track to record a 1.4 percent loss on the week.
                                
 The Euro STOXX 50 <.STOXX50E>, the euro zone's blue chip
index, was down 0.5 percent at 2,662.78 points, piercing a key
support level, the 38.2 percent retracement of the index's fall
from a high in April to a low in May. The index's next major
support level is 2,584.75 points, the 23.6 percent Fibonacci
retracement.
                                
 "The latest data out of the U.S. sparked a flight to quality
by reviving fears of a double-dip recession, with investors
seeking refuge into safer government debt," Louis Capital
analyst Bertrand Michaud said.
                                
 "But we'll have to wait until the fall to get a clear
picture on the economic outlook."
                                
 U.S. shares sank to their lowest close in nearly a month on
Thursday after the batch of macroeconomic figures fuelled
economic worries.
                                
 European financial and mining shares were among the top
losers on Friday, with Allianz <ALVG.DE> down 1.4 percent,
Societe Generale <SOGN.PA> down 1.1 percent and Xstrata <XTA.L>
down 2.1 percent.
                                
 Oil major BP <BP.L> was down 1.6 percent. U.S. officials
said on Thursday the company likely won't put the final plug in
its blown-out Gulf of Mexico oil well until September, while
scientists said the oil spill left a large plume of hydrocarbons
in deep waters, and those chemicals could be there for some
time.
                                
 Among the few stocks on the upside, Dana Petroleum Plc
<DNX.L> surged 5.5 percent after state-run Korea National Oil
Corp (KNOC) launched a hostile $2.9 billion bid. The news
fuelled recent M&A hopes in commodity-related sectors, with gas
producer BG Group <BG.L> rising 4.7 percent on market talk of of
possible bid interest.
                                
 Around Europe, UK's FTSE 100 index <.FTSE> was down 0.4
percent, Germany's DAX index <.GDAXI> down 0.6 percent, and
France's CAC 40 <.FCHI> down 0.5 percent.
                                
 The Thomson Reuters Peripheral Eurozone Countries Index
<.TRXFLDPIPU> was down 1.3 percent.
                                
 Construction stocks fell steeply for a second day in the
wake of Holcim's <HOLN.VX> cautious outlook on Thursday. Holcim,
the world's second-biggest cement maker, dropped 2.6 percent,
and Lafarge <LAFP.PA> was down 1.4 percent.
 (Reporting by Blaise Robinson; Editing by Jon Loades-Carter)