European shares sink as oil slump fuels deflation fears

* FTSEurofirst 300 ends down 2.4 pct, loses 8.2 pct in 6 days

* Relentless fall in oil fuels fears of deflation in euro zone

* About $710 bln wiped off STOXX 600 in six sessions

* France's CGG (NYSE: CGG - news) stock tumbles 29 pct as Technip (Paris: FR0000131708 - news) walks away

By Blaise Robinson

PARIS, Dec (Shanghai: 600875.SS - news) 15 (Reuters) - European shares tumbled on Monday, resuming last week's sharp sell-off as the relentless drop in oil prices hurt energy shares and fuelled fears of deflation in the euro zone.

The FTSEurofirst 300 index of top European shares ended down 2.4 percent at 1,290.65 points, a level not seen in nearly two months, led lower by energy shares as Brent crude oil hit a fresh five-year low close to $60 a barrel.

Italy's ENI (NYSE: E - news) fell 3.5 percent, Spain's Repsol dropped 3 percent and Britain's BP shed 3.2 percent.

The broad STOXX 600 fell 2.2 percent. It has dropped 7.9 percent in the past six sessions, representing a wipeout in market capitalisation of roughly $710 billion, nearly the size of Saudi Arabia's annual GDP.

"The drop in oil would normally be good news for the European economy, but in this case it's actually bad news because it seriously raises the risk of deflation," said Christian Jimenez, fund manager and president of Diamant Bleu Gestion, in Paris.

European Central Bank (ECB) governing council member Ignazio Visco said on Monday afternoon that oil price declines would weigh on already-low inflation in the euro area in coming months.

The ECB has already slashed its forecasts for growth and inflation over the next two years.

Around Europe, Britain's FTSE 100 index fell 1.9 percent, ending at its lowest close in nearly 18 months, Germany's DAX index dropped 2.7 percent, and France's CAC 40 lost 2.5 percent.

Shares (Berlin: DI6.BE - news) in French seismic oil and gas services group CGG were the top losers across Europe, plummeting 29 percent as rival Technip abandoned a takeover bid.

Shares in Banca Monte dei Paschi (Milan: BMPS.MI - news) di Siena fell 8.1 percent, hitting an all-time low, hurt by worries over the prospect of a capital hike to meet ECB rules.

Mining shares were also under renewed pressure, with Rio Tinto down 2.5 percent and BHP Billiton (NYSE: BBL - news) down 3.7 percent, falling on concern over a glut of iron ore and concerns over demand, especially from top metal consumer China.

China's central bank said in a report seen by Reuters on Sunday that economic growth may slow to 7.1 percent in 2015 from an expected 7.4 percent this year.

The STOXX basic resources sector index has tumbled 26 percent since July.

Europe bourses in 2014: http://link.reuters.com/pap87v

Asset performance in 2014: http://link.reuters.com/gap87v

Today's European research round-up (Editing by Pravin Char)