European stocks rattled by Greek bailout tremors

* FTSEurofirst 300 index down 0.9 percent on day

* Biggest weekly fall in nearly two months

* Athens bourse leads losses, lack of debt deal hits confidence

* Banks, miners reverse recent gains

By Toni Vorobyova

LONDON, Feb 10 (Reuters) - European shares suffered their steepest daily fall since January on Friday, with investors ditching banks as fresh cracks appeared in Greece's bid to secure an international bailout and avoid a chaotic default.

After weeks of wrangling and uncertainty a deal had looked almost in the bag on Thursday when Greek politicians agreed on a raft of austerity measures to appease their financial backers, sparking a relief rally on global markets.

But cracks appeared overnight, with euro zone finance ministers telling Athens to do more. On Friday, a far-right Greek party leader said he would not back the austerity measures which are deeply unpopular with the public.

"It's another extension in the Greek drama and confirms that the markets have priced in to some extent that we will be able to get past this. So if the probability of a chaotic default increases a bit, that weighs on the market," Valentijn van Nieuwenhuijzen, head of strategy at ING Investment Management, said.

"The first reaction is a bit of an across-the-board reverse trade: sell the sectors which have done well over the last six weeks."

The FTSEurofirst 300 of top shares closed down 0.9 percent at 1,064.05 points, retreating from six-month highs near 1,080 hit earlier in the week. The pan-European index is down 1.2 percent for the week, its biggest fall in nearly two months.

On a national level, the Athens bourse fared the worst, down 3.2 percent on Friday. Germany's DAX fell 1.4 percent, while the French CAC 40 was down 1.5 percent and Britain's FTSE 100 lost 0.7 percent.

Implied volatility of European equities jumped to three week highs, signalling a spike in risk aversion, while the euro slumped as investors ditched European assets.

Banking stocks - which have outperformed the index with gains of 19 percent since the start of the year compared to 7 percent on the FTSE Eurofirst - were among the worst hit on Friday. The sector shed 2.5 percent as investors fretted about exposure to euro zone sovereign debt.

Commerzbank, one of the higher beta banks closely correlated with broad risk mood, fell 5.2 percent to feature on the worst performers' list on the Greek uncertainty.

The German bank was also in "overbought" territory on the relative strength index (RSI) after gaining 14.8 percent in the past three days as sentiment towards Greece improved early in the week and following strong results from its Polish unit BRE Bank.

Miners, whose growth is correlated to economic performance, were the worst sectoral performers after Chinese imports in January fell to the lowest level since August 2009, raising concerns that demand in the world's second-biggest economy may be weaker than previously thought.

The STOXX Europe 600 basic resources sector index lost 2.1 percent, having surged some 12 percent in the past month.

Corporate results were a reminder of the impact that harsh austerity measures were having on companies.

Galp Energia fell 2 percent after it said it expected Portugal's recession and austerity drive to continue to weigh on oil product sales.

"So far 10 percent of European companies have made their earnings announcements for the fourth quarter of last year, with less than half those beating expectations," Oliver Wallin, investment director at Octopus Investments, said in a note.

"The results reflect that U.S. companies are in a much stronger position, and justifies our decision to increase our positions in U.S. equities over Europe and the UK back in November last year."