Euro Shares Close at 5-1/2 Year Low

European stocks slid 3.8 percent on Thursday as oil at $50 whipped energy shares and a fresh 20-percent slide in Citigroup on Wall Street rattled banks.

The FTSEurofirst 300 index of top European shares closed at 781.06 points, its lowest close since April 2003.

European shares have shed more than 48 percent so far this year, beaten down by financial crisis and recession in the world's major economies.

European banks lost ground after Citigroup shares tumbled more than 20 percent as investors questioned the U.S. bank's survival prospects.

In Europe, Credit Suisse fell nearly 10 percent, Dutch financial group ING lost 8.9 percent, Germany's Deutsche Bank dropped 9.4 percent and Spain's Banco Santander ended 5.6 percent lower.

"It's going to be a fairly bumpy road until the year end," said Franz Wenzel, strategist at AXA Investment Managers in Paris.

"Emerging markets are falling apart, nobody knows when the currency bleeding is going to stop. There is hardly any ray of hope on the horizon...Equity-wise, we're in a dire environment."

But Royal Bank of Scotland swam against the tide, rising 8.8 percent as shareholders met to approve a fundraising plan.

Among top gainers, Ahold shares leapt 8.9 percent after the Dutch supermarket group reported a higher-than-expected 11 percent rise in core quarterly profit and reiterated its full-year margin target.

Oil Skids

Fears that recession will dent demand for oil saw the price of crude fall about 5 percent, hitting sector stocks such as OMV, down 7.8 percent, Royal Dutch Shell, down 5.4 percent and Petroplus, down 14.8 percent.

Around Europe, Britain's FTSE 100 lost 3.3 percent, Germany's CAC dropped 3.1 percent and France's CAC lost 3.5 percent.

The Swiss National Bank made a surprise full percentage point cut in interest rates on Thursday, a third reduction in quick succession aimed at stopping the economy sliding into recession as the global outlook worsens.

Major U.S. stock indexes slid in choppy trade percent, with the benchmark S&P 500 index hitting its lowest in more than six years as data showed the U.S. economy sinking more and investors worried about possible failures by U.S. automakers without a government bailout.

U.S. government data showed that the number of U.S. workers filing new claims for jobless benefits hit their highest level in 16 years in the recent week.

Among European auto stocks, carmaker PSA Peugeot Citroen was down 4 percent after unveiling plans to cut 2,700 jobs and saying that due to the financial crisis and the sector's turmoil, car sales volume in main European markets would drop by at least 10 percent in 2009 and 17 percent in the fourth quarter.

Renault shares fell 6.3 percent and Porsche lost 5.6 percent.

Belgian metals and specialty materials maker Umicore, a leading manufacturer of catalysts for cars, was down 14.5 percent after a profit warning linked to the weak auto market.

Insurers also fell heavily.

Britain's Aviva lost 16.8 percent, French AXA lost 7.4 percent and Swiss Life dropped 10.6 percent.

Copyright 2008 Reuters. Click for restrictions.