Sinking banks knock European stocks lower again

* FTSEurofirst 300 loses 1.3 pct, down 2.4 pct on the week

* Banking shares hit by a negative broker note

* Bradford & Bingley tumbles 18 percent

By Blaise Robinson

PARIS, July 4 (Reuters) - European stocks ended 1.3 percent lower on Friday, reversing the previous session's tentative recovery as banks resumed their decline, hit by a negative note from Goldman Sachs on the sector. The FTSEurofirst 300 index of top European shares closed at 1,163.11 points, down 2.4 percent on the week and showing a loss of 23 percent on the year to date.

Banco Santander (SAN.MC: Quote, Profile, Research), downgraded by Goldman to "neutral" from "buy", shed 4.3 percent, while Royal Bank of Scotland (RBS.L: Quote, Profile, Research) lost 3.2 percent and BNP Paribas (BNPP.PA: Quote, Profile, Research) fell 2.8 percent.

Bradford & Bingley BB.L plunged 18 percent. The UK lender said it will increase its rights issue to 400 million pounds ($794 million) after U.S. investor TPG Capital pulled out of buying a stake as concern deepened about the lender's business plan.

Banking shares have been hammered by fears over the impact of the crisis in the credit markets that have forced banks to unveil multi-billion dollar asset writedowns and emergency capital increases. The DJ Stoxx bank index , down 35 percent so far in 2008, shed 3 percent on Friday.