US stocks, economy worries hit European shares

European shares hit session lows in afternoon trade on Thursday, led by banks and energy stocks and mirroring a slide on U.S. markets as the lift from more interest-rate cuts was quashed by fears about economic growth.

By 1543 GMT the FTSEurofirst 300 index of top European shares was down 5.4 percent at the day's low of 902.04 points.

"We did rally 20 percent in both Europe and the UK and we did that in under two weeks, what that rally was about was the story about the worst of the financial crisis being behind us," said Dresdner Kleinwort strategist Philip Isherwood.

"Now that is perfectly legitimate … while that 20 percent rally was recognising the worst of the financial crisis was over, the same cannot be said for the economy," he said.

Banks were the worst performers, in spite of rate cuts from the European Central Bank, which met expectations with a half-point cut, and the Bank of England, which surprised markets with its biggest rate cut since 1981.

Among stocks on the move were HSBC, which fell nearly 6 percent, UBS, which dropped nearly 9 percent and Santander, which lost over 5 percent.