European stocks dragged down by financials, oil

By Toni Vorobyova

LONDON, May 9 (Reuters) - European stocks fell by midday on Friday, on track for their first weekly loss in a month, as a hefty loss at U.S. insurer AIG (AIG.N: Quote, Profile, Research) weighed on financials and a record-high oil price hurt the broader market.

The FTSEurofirst 300 index were down 1.7 percent by 1021 GMT at 1,337.53 points . If sustained until the close, that would be the biggest one-day drop since mid-March and would snap a three-week-long winning streak on the index.

Banks were the biggest negative weight on the index. As well as AIG's $7.8 billion quarterly loss, financials were hurt by the possibility of big asset sales at Citigroup (C.N: Quote, Profile, Research).

Worries about the health of the financial sector combined with a fresh record high in oil prices near $125 a barrel CLc1 to hit risk appetite, leading to broad pressure on equities.

"(There are) writedowns at AIG and the capital raising, some poor results from European insurers, some stocks downgrades in the financial sector. And the oil price is pretty high, which might be unsettling people a little," said Kevin Gardiner, global equity strategist at HSBC.

"The market has rallied in the last few weeks as well, so I am sure people are inclined to take profits."

AXA (AXAF.PA: Quote, Profile, Research) was down 2.9 percent, Aegon (AEGN.AS: Quote, Profile, Research) down 1 percent and Standard Life (SL.L: Quote, Profile, Research) down 2.6 percent. The DJ Stoxx index of European insurers was down 2.1 percent.

Decliners on the FTSEurofirst outnumbered gainers by more than ten to one .AD.FTEU3.