European shares drop on global slowdown fears

* German DAX index hits lowest level since January

* Earnings expectations for Europe "too high"

* Ahold results impress, shares rise

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

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

By Lionel Laurent

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 around 3 percent as the country's prime minister looked set to call early elections in a bid to quell a rebellion in his leftist Syriza party and seal support for a tough bailout programme.

The pan-European FTSEurofirst 300 equity index was down 1.2 percent at 1,488.63 points. The index's losses for August have already matched those for June, which itself was the worst month in two years for the FTSEurofirst.

Minutes from the U.S (Other OTC: UBGXF - news) . Federal Reserve's July meeting dented expectations for a rate hike in mid-September, amid worries over lagging inflation and slowing growth in China that have impacted global financial markets.

There were some decent European corporate figures out, with shares of Dutch retailer Ahold rising 2.6 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 the ongoing negative pressure caused by worries over China.

U.S. bank Citigroup (NYSE: C - news) cut 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 0.8 percent, while the euro zone's blue-chip Euro STOXX 50 index fell 1.1 percent.

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 0.7 percent.

Today's European research round-up (Additional reporting by Sudip Kar-Gupta; Editing by Toby Chopra)