* FTSEurofirst 300 index slumps 4.4 pct
* Banks, energy stocks fall on recession fears
* Volkswagen zooms as Porsche raises stake
By Joanne Frearson
LONDON, Oct 27 (Reuters) - European shares slumped early on
Monday, tracking big losses in Asia as intensified fears of a
global recession hit banks and energy shares, while Volkswagen
<VOWG.DE> soared as Porsche <PSHG_p.DE> raised its stake.
By 0935 GMT the FTSEurofirst 300 <> index of top
European shares was down 4.4 percent at 793.52 points, adding to
Friday's decline of 4.9 percent.
Asian shares extended losses on Monday, with Japan's Nikkei
sliding 6.4 percent to its lowest close in 26 years, as central
bank policy moves including a record rate cut in South Korea
were not enough to allay fears of a global recession.
[]
Banks took the most points off the European index. HSBC
<HSBA.L>, BNP Paribas <BNPP.PA>, Societe Generale <SOGN.PA> and
Banco Santander <SAN.MC> were down between 5.3-12.7 percent.
"We are wallowing around in the sea of unknown. Until the
capital market situation is eased and the money comes out of
governments into the banking system we are not going to see
anything different. Recession remains on everyone's lips and is
the top concern," said Howard Wheeldon, strategist at BGC
Partners.
Energy shares were also lower. Crude <CLC.1> fell by 3.5
percent as an emergency production cut by OPEC was shrugged off
by traders anxious about the onset of a deep global recession.
"The falls in the commodity price despite the cuts reflect
how weak OPEC is in these circumstances. It shows how low global
demand has become. Investors are not convinced there is going to
be any pick up anytime soon," said Justin Urquhart Stewart,
investment director at Seven Investment Management.
BG Group <BG.L>, BP <BP.L>, Royal Dutch Shell <RDSb.L> and
Total <TOTF.PA> were down between 4.9-8.4 percent.
Pharmaceutical stocks were also in the doldrums as European
drugmaker Merck <MRCG.DE> trimmed its full-year operating margin
target.
Roche <ROG.VX>, Sanofi-Aventis <SASY.PA> and AstraZeneca
<AZN.L> were down between 1.5-4.9 percent.
VOLKSWAGEN JUMPS ON PORSCHE STAKE RAISE
Volkswagen <VOWG.DE> jumped 87 percent after weekend news
that sports carmaker Porsche <PSHG_p.DE> has raised its VW stake
to 42.6 percent of votes and controls a further 31.5 percent via
cash-settled options.
British bank HBOS <HBOS.L> also bucked the downtrend, up 2.5
percent. British Prime Minister Gordon Brown said in the
Financial Times over the weekend that the proposed merger
between LloydsTSB <LLOY.L> and the group was the right step to
save the bank as no other bidders had come forward.
Underlining worries on the macroeconomic front, the German
Ifo index which measures indications about German business
sentiment fell to its lowest level since May 2003 on
expectations the export sector will take a big hit from weakened
foreign demand. []
"All economic data which we have had over recent weeks and
will get in the months ahead is going to be on the negative side
and therefore there is nothing to hang any confidence on," said
Wheeldon.
At 1400 GMT U.S. new home sales data will give the latest
snapshot of the state of the U.S. housing market.
Across Europe, the FTSE 100 <> index was down 4.35
percent, Germany's DAX <> slipped 2.6 percent and France's
CAC 40 <> index was 5.5 percent lower.
(Editing by Greg Mahlich)
