* FTSEurofirst 300 down 2.9 pct; hits 6-yr low
* Saint-Gobain sinks after surprise 1.5 bln rights issue
* UBS tumbles as U.S. widens probe into Swiss lender
* For up-to-the-minute market news, click on []
By Blaise Robinson
PARIS, Feb 20 (Reuters) - European stocks extended their
hefty losses on Friday, tumbling to a six-year low as investors
fretted about the prospect of more capital increases and bank
nationalisations on the back of a deepening economic downturn.
At 1013 GMT, the FTSEurofirst 300 <> index of top
European shares was down 2.9 percent at 741.78 points, having
hit a low of 739.12, the index's lowest level since March 2003.
"We're near the cliff's edge, very close to capitulation,
the mood is very gloomy," said Jean-Claude Petit, head of
equities at Barclays Wealth Managers France.
"I'm not sure that governments and central banks are
realising what's really going on. The gaffes made by
West-European banks in East Europe revealed recently are having
a devastating effect on the market," he said.
Saint-Gobain <SGOB.PA> tumbled 15 percent after the French
building material group launched a surprise 1.5 billion euro
($1.89 billion) rights issue.
Lafarge <LAFP.PA>, the world's biggest cement maker, also
launched a 1.5 billion euro rights issue and slashed its
dividend in a bid to shore up its balance sheet. Lafarge shares
were down 1 percent, as the widely expected rights issue was
already priced in, traders say.
"A lot of companies will have to ease the pressure on the
balance sheets, so there are many candidates for capital
increases," Petit said.
"Companies have to choose between the plague and cholera:
either they have a shaky balance sheet, and the market doesn't
like it, or they raise capital, which the market doesn't like
either."
UBS <UBSN.VX> plunged 17 percent after U.S. tax authorities
said they were widening a probe into the Swiss bank and wanted
52,000 client names, a day after UBS agreed to a hefty fine to
settle criminal charges.
AXA <AXAF.PA>, Europe's second biggest insurer, tumbled for
a second consecutive day, losing 15 percent, hit by downbeat
broker notes after the company's results failed to dissipate
fears of a capital increase. AXA is down 45 percent in 2009.
Energy groups were in the doldrums as U.S. crude oil futures
<CLc1> fell 3.5 percent, hit by worries over the outlook for the
global economy.
BP <BP.L>, Royal Dutch Shell <RDSb.L> and Total <TOTF.PA>
were down 2.3 percent to 3.1 percent.
Adding to the grim picture, Japan's central bank said on
Friday that deterioration in corporate profits had gathered
pace. In its monthly report, the Bank of Japan reiterated that
economic conditions were deteriorating rapidly -- its bleakest
diagnosis ever -- and would likely continue to worsen for the
time being.
The auto sector was also in the spotlight after General
Motors' <GM.N> loss-making carmaker Saab Automobile said it
would seek legal protection from creditors to allow it to
restructure and seek new funding.
BMW <BMWG.DE> was down 4.3 percent, Renault <RENA.PA> was
down 4.4 percent and Peugeot <PEUP.PA> was down 5 percent.
Across Europe, the FTSE 100 <> index was down 2.6
percent, Germany's DAX <> was down 3.3 percent and
France's CAC 40 <> was 3.1 percent lower.
($1=.7952 Euro)
(Reporting by Joanne Frearson; Editing by Sharon Lindores)
