Financials and commodities lead Europe shares lower

* FTSEurofirst 300 falls 3.4 percent

* Financials, commodities lead index to 5-1/2 year low

* Ahold, RBS lead risers

By Brian Gorman

LONDON, Nov 20 (Reuters) - European stocks fell to the their lowest level since March 2003 early on Thursday, adding to the previous session's selloff, as banks and commodities continued their slide on worries of a deep global slowdown.

At 1006 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 3.4 percent at 784.21 points, having fallen as low as 782.67.

The benchmark index has fallen more than 48 percent this year.

"There's no volume. No one wants to buy. People will take opportunities to sell," said Justin Urquhart Stewart, director at Seven Investment Management.

"No one wants to float a boat -- they will wait for the tide to turn. What will make it turn? We have to get the bad news completely out the way. That may come when there are more realistic valuations of properties in the United States."

European banks remained under pressure after Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) faced a crisis of confidence on Wednesday as investors questioned the survival prospects of the U.S. banking giant, and its shares tumbled 23 percent to a 13-year low.

"Having seen Lehmans and Merrill Lynch fall by the wayside this year, the sight of another major such as Citigroup struggling will prove a bitter pill to swallow," said Chris Hossain, senior sales manager at ODL Securities.

Dexia (DEXI.BR: Quote, Profile, Research, Stock Buzz), Fortis (FOR.BR: Quote, Profile, Research, Stock Buzz), Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz), Banco Santander (SAN.MC: Quote, Profile, Research, Stock Buzz) and UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) fell between 5.9 and 9 percent.

But BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) was outperforming, down 0.3 percent, after announcing late on Wednesday that it is not considering any capital increase other than that already scheduled to finance the acquisition of Fortis Bank, which will be subscribed by the Belgian and Luxembourg states

Insurers continued to fall, with their equities portfolios hurt by the slide in the stockmarket.

Axa (AXAF.PA: Quote, Profile, Research, Stock Buzz), Aviva (AV.L: Quote, Profile, Research, Stock Buzz), Prudential (PRU.L: Quote, Profile, Research, Stock Buzz), Swiss Life (SLHN.VX: Quote, Profile, Research, Stock Buzz) and Zurich Financial (ZURN.VX: Quote, Profile, Research, Stock Buzz) fell between 5.1 and 8.9 percent.

All 38 industry groups in the FTSEurofirst 300 index were lower.

But Royal Bank of Scotland was the second-biggest gainer on the FTSEurofirst 300 with a 5.7-percent rise ahead of a shareholder meeting to approve a fundraising plan.

"It's the RBS vote today and there's a bit of conjecture in-line with the Lloyds yes vote that shareholders will seek to approve capital raising backed by HM Treasury," said a trader.

"It's positive sentiment ahead of the vote and the market expects a good outcome."

AHOLD RISES

Dutch supermarket group Ahold (AHLN.AS: Quote, Profile, Research, Stock Buzz) was one of the few gainers, up 6.1 percent, after it reported an 11 percent rise in core quarterly profit, beating estimates, and reiterated its full-year operating margin target.

Energy networks operator National Grid (NG.L: Quote, Profile, Research, Stock Buzz) rose 0.8 percent after posting a 4 percent increase in half-year profits. The company forecast full year results in line with its expectations and said the outlook for 2008/9 was positive. Air France-KLM AIRF.PA fell 8 percent after posting a 44 percent drop in operating profit in the second quarter and cutting its full-year profit forecast.

Oil prices CLc1, which saw their lowest close in 22 months on Wednesday, fell further, down nearly 2 percent to less than $53 a barrel.

Total (TOTF.PA: Quote, Profile, Research, Stock Buzz), ENI (ENI.MI: Quote, Profile, Research, Stock Buzz), BP (BP.L: Quote, Profile, Research, Stock Buzz) and Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) fell between 1.5 and 2.6 percent.

Likewise, base metal prices fell, though gold was higher. Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz), BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz), Eurasian Natural Resources Corp. (ENRC.L: Quote, Profile, Research, Stock Buzz), Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz), Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz), Vedanta Resources (VED.L: Quote, Profile, Research, Stock Buzz), Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) fell between 2.2 and 8.7 percent. French carmaker PSA Peugeot Citroen (PEUP.PA: Quote, Profile, Research, Stock Buzz) was down 2.5 percent after unveiling plans to cut 2,700 jobs and saying that due to the financial crisis and the sector's turmoil, car sale volumes in main European markets would drop by at least 10 percent in 2009 and 17 percent in the fourth quarter.

Across Europe, the FTSE 100 .FTSE index was down 1.4 percent, Germany's DAX .GDAXI was 2.1 percent lower and France's CAC 40 .FCHI was down 2.6 percent.

UK retail sales data provided further evidence of economic slowdown. Sales fell 0.1 percent in October, said the Office for National Statistics. But this was less of a fall than analysts had forecast.

The ONS added that the September figure was revised to show a fall of 0.5 percent, compared with the previously stated 0.4 percent. (Additional reporting by Atul Prakash and Nicholas Vinocur; Editing by Hans Peters)