* FTSEurofirst 300 down 8.5 pct
* Banks lead decline
* Oil shares slide on crude
By Rebekah Curtis
LONDON, Oct 24 (Reuters) - European shares slid 8.5 percent
on Friday to mirror a tailspin in Asian stocks, as data
suggesting Britain would enter a prolonged recession and torrent
of woeful company results rattled jumpy investors.
At 0937 GMT the pan-European FTSEurofirst 300 index <>
was down 8.5 percent at 798.86 points, having hit its lowest
since May 2003 at 796.94 points.
Global stocks tumbled to a new five-year low on Friday and
demand for the relative safety of government bonds and
low-yielding currencies soared. In Asia Japan's Nikkei <>
slid 9.6 percent on fears over a deteriorating world economy as
a financial crisis gathered speed.
Stricken banks led the decline, with HSBC <HSBA.L> down more
than 10 percent, Santander <SAN.MC> off more than 9 percent and
UBS <UBSN.VX> shedding 7.4 percent. The European banks sector
<.SX7P> dropped 9.2 percent.
"It does shock you ... One hasn't been expecting this,"
Edward Menashy, an economist at Charles Stanley in London, said
of the market's decline.
"The fall in the Japanese market is incredible...The fear
today is that the Japanese carry trade is starting to unwind."
Around Europe, Britain's FTSE 100 <> slid 6.1 percent,
Germany's DAX <> dropped 7.4 percent and France's CAC
<> lost 7.1 percent.
The British economy shrank more than expected and for the
first time in 16 years in the third quarter of 2008, official
data showed on Friday.
The figures will likely boost expectations that the Bank
of England will cut interest rates by another 50 basis points
next month as the economy looks like heading into its first
recession since the early 1990s.
"Markets have been steeling themselves for that announcement
for a considerable period ... (but) the recession to come is
going to be much steeper than anyone had anticipated," Menashy
said of the British GDP data.
Sterling tumbled to its lowest level against the dollar
since 2003 following the data.
Gloom abounded across the continent, with a survey of
companies showing the euro zone 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.
AUTO GLOOM
Volvo <VOLVb.ST>, the biggest faller in Europe, dropped more
than 21 percent after reporting worse-than-expected
third-quarter results.
The world number two truck maker's top executive said on
Friday the North American market, which has been weak for almost
two years, was likely to remain tough in 2009.
Peugeot <PEUP.PA> and Renault <RENA.PA> 14 percent and 18
percent, respectively, after issuing profit warnings.
Oil shares also tanked as crude prices fell below $66 a
barrel, to new 16-month lows, pressured by gloom across all
markets about a global economic downturn that could reduce the
impact of any cut in oil output from OPEC.
BP <BP.L>, Royal Dutch Shell <RDSa.L> and Total <TOTF.PA>
shed between 6.7 and 7.2 percent.
Miners took a whipping as gold and copper prices tumbled,
with Vedanta Resources <VED.L> down 10.6 percent, Kazakhmys
<KAZ.L> off 8 percent and Xstrata <XTA.L> down 7.8 percent.
Shares in Ahold <AHLN.AS> were the sole risers in Europe, up
5.4 percent and as the Dutch supermarket retailer posted a 3.9
percent rise in third quarter sales, at the top end of analysts
estimates.
(Editing by Hans Peters)
