* Banks slip; concerns about economic growth mount
By Atul Prakash
LONDON, Dec 1 (Reuters) - European shares slumped on Monday, pressured by banks and commodity stocks, as mounting concerns about a prolonged global slowdown and weaker demand for oil and metals hurt market sentiment.
The FTSEurofirst 300 .FTEU3 index of top European shares closed 6 percent down at 810.04 points after rising 13 percent last week. The benchmark is down 46 percent so far this year after posting gains in each of the previous five years.
Banks were the worst hit, with Standard Chartered Bank (STAN.L: Quote, Profile, Research, Stock Buzz) falling 14 percent and UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) down 12 percent, Fortis (FOR.BR: Quote, Profile, Research, Stock Buzz) slipping 11 percent and BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) declining 7.6 percent.
Commodities shares also slipped, tracking an 8 percent drop in crude prices, a 2.8 percent fall in aluminium prices and a 1.6 percent drop in copper prices, mainly on worries about global economic growth.
"The short-term outlook is going to be very difficult, given the weakening growth forecast, falling corporate profitability and the softening labour market," said Henk Potts, equity strategist at Barclays Stockbrokers.
"What the market would need to see is the practical implication of the measures that have been announced starting to work through the system and having a positive result."
A United Nations report said that world economic growth would slow to 1 percent in 2009 from 2.5 percent this year as the financial crisis bit, and the global economy might even contract if stimulus packages proved too little too late.
The financial crisis that began with a U.S. housing market collapse last year has already knocked several big economies into recession, including the euro zone. Most economists believe the United States and Britain will soon follow.
European and Chinese industry activity slumped in November, Japanese officials said their economy was slowing rapidly and U.S. factory activity fell in November to its weakest since the 1981-1982 recession.
"It is hard to see recoveries in stock markets as anything but short term at the moment, and traders seem to be too willing to jump out of rallies very quickly, ahead of the perceived next major sell-off," said David Jones, chief market strategist at IG Index.
RATE CUTS EXPECTED
Central banks in Britain, the euro zone, Australia and New Zealand are expected to cut borrowing costs sharply this week in response to the crisis.
Expectations for more rate cuts in Britain were underlined by the UK's PMI index showing manufacturing shrank at a record pace in November after a collapse in new orders. [ID:nL1349797]
Energy stocks were also down. BP (BP.L: Quote, Profile, Research, Stock Buzz), Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz), gas producer BG Group (BG.L: Quote, Profile, Research, Stock Buzz) and Tullow Oil (TLW.L: Quote, Profile, Research, Stock Buzz) shed between 5.8 and 8.6 percent.
Automobile stocks fell as vehicle manufacturers in Sweden, France, Spain, Japan and South Korea all reported tumbling sales, taking fresh hits from plunging consumer confidence on the world's car lots. [ID:nL1337831]
Volkswagen (VOWG_p.DE: Quote, Profile, Research, Stock Buzz) was down 6.4 percent, Daimler (DAIGn.DE: Quote, Profile, Research, Stock Buzz) fell 7.3 percent and Porsche PSHGp_.DE dropped 7.8 percent.
Dutch telecoms group KPN (KPN.AS: Quote, Profile, Research, Stock Buzz) was down 2.7 percent after the company said it would sell its Getronics unit's Business Solutions activities for local governments and healthcare in the Netherlands to Total Specific Solutions.
Across Europe, the FTSE 100 index .FTSE closed 5.3 percent lower, Germany's DAX .GDAXI was 5.9 percent lower and France's CAC 40 .FCHI was down 5.6 percent. (Reporting by Atul Prakash; Editing by Hans Peters)
