European shares set for biggest weekly loss in 3 years

* FTSEurofirst 300 down 2 pct; weekly loss 5.4 pct

* $468 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 stocks tumbled again on

Friday, on course for their biggest weekly loss since September

2011 as shares in oil and oil services firms sank further along

with crude oil prices.

The broad STOXX Europe 600 has lost 5.2 percent

during the week, representing a wipeout in market capitalisation

of roughly $468 billion, nearly twice the size of Greece's GDP.

Saipem (Other OTC: SAPMY - news) dropped 5 percent on Friday, hitting a

10-year low, while Royal Dutch Shell (Xetra: R6C1.DE - news) was down 2.4

percent, Repsol down 4.8 percent and CGG (NYSE: CGG - news) down

4.6 percent.

Brent crude fell below $63 a barrel, its lowest

since July 2009, as concerns over a global supply glut and a

sluggish demand outlook persisted.

Crude has dropped more than 45 percent since June, forcing a

number of European oil services companies including Seadrill

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

accelerate cost-cutting efforts.

The STOXX oil and gas index has plummeted 29 percent

since June. The sell-off has wiped roughly $300 billion off

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.

At 1600 GMT, the FTSEurofirst 300 index of top

European shares was down 2 percent at 1,330.66 points. The index

has dropped 5.4 percent so far this week.

It is up 0.9 percent in 2014, well below the 9.1 percent

gain by Wall Street's S&P 500.

Greece's political crisis has also been weighing on market

sentiment this week, with Athens's ATG stock index

sinking nearly 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 vowed to tear up the

bailout. Failure to elect a president would trigger early

elections, which opinion polls show Syriza is likely to win.

Speculation of an imminent credit downgrade of France by

Fitch also rattled investors on Friday. Fitch placed France on

rating watch negative in October, signalling the possibility of

a rating change.

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 Andrew

Roche)