European shares suffer record loss, hit 4-year lows

By Sitaraman Shankar

LONDON (Reuters) - European shares suffered their worst one-day percentage fall on record on Monday, sinking to 4-year closing lows as investors dumped stocks across the board and Wall Street slid.

The pan-European FTSEurofirst 300 index fell 7.8 percent to close at 1,004.90 points, worse than a 6.3-percent fall on September 11, 2001, the day of the attacks on the World Trade Centre buildings in New York.

The index briefly slid below the 1,000 mark for the first time since late 2004 and the Dow Jones industrial average slipped below 10,000 points on Wall Street.

"It's just in free fall. The outlook is still very bearish and we are nowhere near the bottom. There is no reason to buy anything at the moment. The bid-offer spread is huge," said Nicole Elliott, a technical analyst with Mizuho Securities.

Banks and commodity shares took most points off the index, with Royal Bank of Scotland -- which suffered a credit rating cut from Standard & Poor's -- sliding 20 percent, Barclays losing 14.7 percent and UBS falling 12.8 percent.

BP, Total and Royal Dutch Shell fell 7.7-8.9 percent as oil fell below $90 a barrel to an eight-month low.

"People have decided that markets have no ability to repair themselves and politicians have control of this process," said John Haynes, strategist at Rensburg Sheppard Investment Management.

"The buyers have stepped away, and the sellers are still there."