European stocks post their biggest weekly loss since mid-2011

* FTSEurofirst 300 down 2.6 pct; weekly loss of 5.9 pct

* $524 bln wiped off STOXX 600 companies this week

* Greek stocks sink 20 pct in week on political turmoil

* Pictet bearish on euro zone stocks for 2015

By Blaise Robinson

PARIS, Dec (Shanghai: 600875.SS - news) 12 (Reuters) - European shares tumbled on Friday

and posted their biggest weekly loss since mid-2011 as a

relentless slide in crude oil prices pounded the European energy

sector.

The broad STOXX Europe 600 index has lost 5.8

percent during the week, representing a wipeout in market

capitalisation of roughly $524 billion, more the size of

Norway's annual GDP.

"This is a bloodbath. After such a negative week, there's

not even a rebound into the close. The fact that oil can't find

a floor is spooking market players," Saxo Bank trader Pierre

Martin said.

Oil fell to fresh lows not seen since mid-2009 on Friday

with Brent crude slipping below $62 a barrel while U.S.

crude fell below $58 on mounting worries over a global

supply glut and weak demand.

Saipem (Other OTC: SAPMY - news) dropped 5.6 percent on Friday, hitting a

10-year low, while Royal Dutch Shell (Xetra: R6C1.DE - news) lost 3 percent,

and Repsol retreated by 6 percent.

Crude has dropped nearly 50 percent since June, forcing a

number of European oil services companies including Seadrill

and Fugro (Xetra: A0ET3V - news) to scrap dividends as oil majors

have accelerated cost-cutting.

The STOXX oil and gas index, losing 3.6 percent on

Friday, has plummeted 30 percent since June. The sell-off has

erased roughly $300 billion from market capitalisation of the

sector.

"We're reaching a point where there's a risk of seeing

corporate and sovereign defaults in energy-producing countries,

which could revive global systemic risks," said Christophe

Donay, head of strategy at Pictet, which has $441 billion in

assets under management and custody.

"I wouldn't be surprised to see the IMF helping some of the

oil-producing countries next year ... The key for asset managers

for 2015 is really to diversify and hedge portfolios."

Pictet has recently sold all euro zone stocks in its

portfolios amid doubts about the European Central Bank's ability

to revive the region's economic growth, Donay said.

The FTSEurofirst 300 index of top European shares

ended 2.6 percent lower on Friday at 1,321.73 points, wiping off

nearly all its gains of 2014. The benchmark index is now only up

0.4 percent in 2014.

Shares (Berlin: DI6.BE - news) in companies with a strong exposure to Russia also

took a beating on Friday as the Russian rouble dropped to a new

low of almost 58 to the dollar.

The rouble has hemorrhaged more than 40 percent against the

dollar since the beginning of the year, hurt by the slide in oil

and risk aversion to Russian assets fuelled by Russia's

stand-off with the West over the crisis in Ukraine.

For Saxo Bank analysts, there's a risk that Russia could

default on its debt at some point in 2015.

"There is a perfect storm brewing for the Russian economy

that could either end with government-owned companies or with

the government itself selectively moving into a default," Saxo

CIO Steen Jacobsen wrote in a note.

Shares in Austrian lender Raiffeisen Bank International (Other OTC: RAIFY - news)

, which relies heavily on Russia for profits, slid 8.5

percent, while Danish brewer Carlsberg (Other OTC: CABGY - news) , which has a

large exposure to the country, fell 2.7 percent.

Greece's political crisis also weighed on market sentiment

during the week, with Athens's ATG stock index plummeting

20 percent since last Friday.

Investors have been rattled by a decision by the Greek

government to bring forward to next week a presidential vote

that will force nearly two dozen independent lawmakers to decide

whether to side with Prime Minister Antonis Samaras' pro-bailout

cabinet, or with leftist radicals who have pledged to tear up

the bailout.

Failure to elect a president would trigger early elections,

which opinion polls now show Syriza is likely to win.

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

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

Today's European research round-up

(Additional reporting by Annabella Nielsen; Editing by Mark

Heinrich)