Banks push European shares down 1.5 pct

LONDON, Aug 19 (Reuters) - European shares extended an early decline on Tuesday as a sell-off in banking stocks worsened after fresh concern about the impact of the credit crunch on the financial sector hit global equities.

By 0750 GMT the FTSEurofirst 300 index .FTEU3 of top European shares was down 1.5 percent, or 18.46 points, at 1,170.69 points.

Banks accounted for a net negative contribution of 5.2 points to the index, compared with a net negative contribution of 3.8 points at 0713 GMT.

Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) lost 4 percent, HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) fell 1.5 percent and Banco Santander (SAN.MC: Quote, Profile, Research, Stock Buzz) and BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) shed 2.5 to 3.6 percent.

A media report on Monday that suggested the U.S. government may have no choice but to effectively nationalise mortgage finance groups Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) and Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz), reignited concern in the investment community that the worst of the mortgage crisis was far from over and sent stocks reeling. (Reporting by Amanda Cooper)