By Blaise Robinson PARIS, Nov 13 (Reuters) - European stocks fell on Thursday, declining for the fifth time in seven sessions and ending at their lowest closing level in two weeks on lingering worries over the global economy and corporate profits. The FTSEurofirst 300 index of top European shares closed the roller-coaster session 0.2 percent lower at 852.55 points. Tumbling bank stocks were the biggest drag on the market, hit by signs that the U.S. Treasury was backing away from using a $700 billion rescue fund to cleanse bank balance sheets of bad mortgage debt and focus instead on buying stakes in banks. Shares in British lenders were among the most hammered, amid mounting worries that the UK economy faces tough times ahead. Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) lost 6.2 percent, Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) shed 6.1 percent and HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) dropped 7 percent. "In the short term, the news flow will remain negative, with more jobs destruction, falling consumer spending, etc etc. And the gloom is on both the macro and the micro fronts, with profit warnings on the rise," said Yann Lepape, economist at Oddo Securities, in Paris. "We are reaching the worst of the recession in developed countries and fourth-quarter figures, which will be quite bad, could be the gloomiest that we will see," he said. "But the reaction from authorities has been very bold, and on the longer term, that should prevent, in our view, the biggest risk of all: deflation." Mining stocks, which have been dumped over the past weeks on fears that the economic slowdown would spread to emerging economies, sagged on Thursday, with Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) losing 4.8 percent, Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz) falling 6.9 percent and BHP Billiton BHP.L dropping 2.3 percent. The FTSEurofirst 300 has lost 44 percent so far this year, hit by fears that the crisis in the credit market would spark a deep global downturn. RECESSION? DEPRESSION? Testifying at a U.S. House Oversight and Government Reform Committee hearing on Thursday, billionaire investor George Soros said: "A deep recession is now inevitable and the possibility of a depression cannot be ruled out." Soros said hedge funds will be "decimated" by the current financial crisis and forced to shrink their portfolios by 50-75 percent. Valerie Plagnol, chief strategist at CM-CIC Securities in Paris, said: "This is a case study of a massive deflationary economic situation that is building up. There is no doubt we are entering into a recession and it could be pretty nasty and deep. "At this point, it's hard to say that we have completely avoided the risk of a depression and that's probably one of the reasons why the market is still extremely weak and nervous." Some economists define a recession as a widespread decline in GDP and employment, lasting from six months to a year, while a depression is a long-term economic state characterised by unemployment, low prices and low levels of trade and investment. Around Europe, UK's FTSE 100 index .FTSE dropped 0.3 percent, hit by sagging banking and mining shares, while Germany's DAX index .GDAXI gained 0.6 percent and France's CAC 40 .FCHI rose 1.1 percent. On the upside, GDF Suez (GSZ.PA: Quote, Profile, Research, Stock Buzz), Europe's largest utility by sales, gained 5 percent after the company confirmed its profit growth target. Telecoms shares, seen as defensive stocks, gained ground, with France Telecom (FTE.PA: Quote, Profile, Research, Stock Buzz) up 2.8 percent and Vodafone (VOD.L: Quote, Profile, Research, Stock Buzz) up 1.8 percent. BT (BT.L: Quote, Profile, Research, Stock Buzz) surged 8.9 percent after posting second-quarter earnings and revenues ahead of forecasts and laying out plans to cut 10,000 jobs and boost its pension schemes. (Reporting by Blaise Robinson; editing by Simon Jessop)

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