European shares drop on global slowdown worries and new Greek vote

* FTSEurofirst 300 closes down 1.9 pct

* German DAX index hits lowest level since January

* Athens' ATG down 3.5 pct as new elections loom

* Europe bourses in 2015: http://link.reuters.com/pap87v

* Asset performance in 2015: http://link.reuters.com/gap87v

By Sudip Kar-Gupta

LONDON, Aug 20 (Reuters) - European stock markets extended their losing streak on Thursday, with benchmark indexes in Frankfurt and London hitting seven-month lows as fears of a global economic slowdown took hold.

The Athens stock market also fell 3.5 percent as the country looked set for new elections on Sept. 20.

Greek Prime Minister Alexis Tsipras had been expected to seek early elections to quell a rebellion in his leftist Syriza party and seal support for a painful bailout programme.

The pan-European FTSEurofirst 300 equity index closed down 1.9 percent at 1,477.35 points. Its losses for August have already matched those for June, which was its weakest month in two years, as worries over lagging inflation and slowing growth in China weigh on global financial markets.

There were some decent European corporate figures out, with shares of Dutch retailer Ahold rising 2.1 percent after a solid rise in profits.

However, Deutsche Bank (Other OTC: DBAGF - news) managing director Nick Lawson wrote to clients that earnings expectations for Europe were 'probably too high', while others pointed to negative pressure from worries over China.

U.S (Other OTC: UBGXF - news) . bank Citigroup (NYSE: C - news) cut its global economic growth forecasts for 2016 to 3.1 percent, from 3.3 percent, citing significant downgrades for the euro area and China among others.

"China is having the biggest impact on the markets. I'd look to sell any rallies at the moment," said Berkeley Futures associate director Richard Griffiths.

DROP IN DAX

Germany's DAX index, which contains major carmakers that export to China, weakened by 2.3 percent, while the euro zone's blue-chip Euro STOXX 50 fell 2.2 percent.

The DAX is some 16 percent below a record high of 12,390.75 set in April and at its lowest level since January.

Mark Evans, fund manager at Taube Hodson Stonex Partners, said a domestic recovery within Europe - helped by economic stimulus measures from the European Central Bank (ECB) - could offset problems caused by the slowdown in China.

Nevertheless, concerns over China - which is a leading global consumer of commodities - pushed the shares of major oil companies down on Thursday, with the STOXX Europe 600 Oil & Gas Index dropping 1.3 percent.

Today's European research round-up (Additional reporting by Lionel Laurent; Editing by Toby Chopra/Ruth Pitchford)