Europe stocks fall to lowest close since June '06

LONDON, March 10 (Reuters) - European shares ended sharply lower on Monday as worries intensified that a credit crisis would lead to more losses at banks and spread wider, slowing economies and hurting demand for metals.

The FTSEurofirst 300 index of top European shares ended unofficially 1.15 percent lower at 1,254.76 points, its lowest close since June 2006.

Banks and mining stocks were the heaviest weights on the pan-European index, with UBS (UBSN.VX: Quote, Profile, Research) falling 4 percent, BNP Paribas (BNPP.PA: Quote, Profile, Research) 2.7 percent and Credit Suisse (CSGN.VX: Quote, Profile, Research) 3.2 percent.

The top three drags on the index were mining stocks Rio Tinto (RIO.L: Quote, Profile, Research), BHP Billiton (BLT.L: Quote, Profile, Research) and Anglo American (AAL.L: Quote, Profile, Research), which fell between 4 and 6 percent, driven by a fall in copper prices.

"People are concerned at signs that the financial system is not repairing itself, and that earnings outside the financial sector are now going to get hurt," said John Haynes, strategist at Rensburg Sheppard Investment Management.

"Logically hedge funds should be the next victim and people who deal with hedge funds, the prime brokers, those who supply capital."

"Interest rate cuts are not enough -- this is beginning to go beyond the Fed," he said.

U.S. stocks fell as traders cited talk that a Wall Street firm faced liquidity concerns, dragging down financial shares and adding to anxiety about the credit crisis.

(Reporting by Sitaraman Shankar)