* FTSEurofirst 300 index down 1 percent
* Banks under pressure on euro zone worries
* BP rises on oil capture; Adidas up on upgrade
* For up-to-the minute market news, click on []
By Joanne Frearson
LONDON, June 7 (Reuters) - European shares fell sharply on
Monday for the second consecutive day on worries over euro zone
debt problems after concerns grew on Friday that a Greek style
debt crisis could hit Hungary, with banks the major losers.
By 0850 GMT, the pan-European FTSEurofirst 300 <>
index of top shares was down 1 percent at 988.86 points. The
index is down around 11.2 percent from a mid-April peak, on
worries the euro zone's debt crisis could derail economic
recovery.
Banking stocks extended their falls from the previous
session, with the STOXX Europe 600 Banking index <.SX7P> down
1.8 percent.
Banks with exposure to Eastern European countries such as
Raiffeisen International <RIGH.VI>, Erste Group <ERST.VI> and
UniCredit <CRDI.MI> fell 0.6 to 2.3 percent.
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For a graphic of European banks' exposure to Hungary click
http://graphics.thomsonreuters.com/10/HN_BNKXP0610.gif
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British banks Barclays <BARC.L> and Lloyds Banking Group
<LLOY.L> fell 2.2 and 2.9 percent respectively. The Daily Mail
said British finance minister George Osborne is planning to slap
a punishing new tax on banks.
"The volatility of last week carries on," said Justin
Urquhart Stewart, director at Seven Investment Management.
"Hungary and its debt situation is adding to the nerves in the
market following the U.S. jobs data on Friday."
Markets tumbled in the previous session after comments by
the Hungary government suggested that the country might suffer a
Greece-style debt crisis.
But the chairman of the Eurogroup of euro zone finance
ministers, Jean-Claude Juncker, on Sunday dismissed concerns
about Hungary might face a Greek-style debt crisis and said the
current level of the euro did not worry him. []
"The situation with Hungary is not anything new and the fact
that something like that can have such a reaction just shows the
nervousness of investors' confidence at the moment. I think the
sell-off is over done," Urquhart Stewart said.
BP GAINS
Commodity stocks were under pressure, with crude <CLc1>
falling 1.2 percent and metal prices lower on growth demand
concerns.
Miners Rio Tinto <RIO.L>, BHP Billiton <BLT.L> and Anglo
American <AAL.L> fell 2.1 to 2.8 percent.
BP <BP.L>, however, gained 0.6 percent, extending its
rebound from the previous session. It said it expected a second
oil containment system would allow it to increase the amount of
oil being captured from the spill. []
Also on the upside, Adidas <ADSG.DE> gained 1.2 percent
after Deutsche Bank upgraded the sporting goods maker to "buy"
from "hold" and said it would benefit from the weaker euro.
But the VDAX-NEW volatility index <.V1XI>, a gauge of
investor risk appetite or aversion, advanced 7.5 percent,
hitting a more than one-week high and extending the previous
session's 10.3 percent rise.
The higher the volatility index, based on sell- and
buy-options on Frankfurt's top-30 stocks <0#.GDAXI>, the higher
is investors' aversion for risky assets such as equities.
Across Europe, the FTSE 100 <> index was down 1.1
percent, Germany's DAX <> slipped 0.8 percent and France's
CAC 40 <> was down 1.1 percent.
Spain's IBEX <> fell 1.5 percent, Portugal's PSI 20
<> was down 1.2 percent and Italy's benchmark <.FTMIB>
fell 0.6 percent.
(Graphics by Scott Barber; Editing by Jon Loades-Carter)
