By Blaise Robinson

PARIS (Reuters) - European stocks fell on Friday, knocked lower by a sharp drop in mining shares that followed metal prices, while automakers retreated after a profit warning from BMW (BMWG.DE: Quote, Profile, Research) and GM's GM.N massive loss.

Irish drugmaker Elan (ELN.I: Quote, Profile, Research) plummeted 46 percent as a second product setback in a week shattered confidence in its line-up of biotech medicines.

Investors were also rattled by poor U.S. data that showed the unemployment rate hit its highest level in four years during July as employers cut non-farm jobs for a seventh straight month, though less severely than predicted.

The jobless rate climbed to 5.7 percent from 5.5 percent in June as 51,000 jobs were eliminated in July, bringing losses for the year to 463,000. Analysts polled by Reuters had expected 75,000 jobs would be cut last month but had forecast the unemployment rate would rise only to 5.6 percent.

The FTSEurofirst 300 index of top European shares closed 1.4 percent lower at 1,163.73 points. It ended the week with a loss of 0.5 percent.

"The data is in line with what we saw in the previous months...the job losses are slightly lower than what we saw earlier this year, but the unemployment rate is getting worse," said Jean-Marc Lucas, economist at BNP Paribas, in Paris.

"It confirms that the job market is deteriorating, and there is no reason to believe that the trend will change over the next few months, even over the next few quarters."

Adding to jitters on Friday, oil prices rose sharply, rekindling inflation fears and concerns over corporate costs.