European shares extend losses after U.S. jobs data

LONDON, Sept 5 (Reuters) - European shares extended losses in afternoon trade on Friday after weaker-than-expected U.S. non-farm payrolls data for August prompted investors to heavily sell stocks.

At 1242 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 1.8 percent at 1,130.62 points. The pan-European index has fallen 25 percent this year.

The U.S. unemployment rate unexpectedly shot up to 6.1 percent in August, its highest in more than 4-1/2 years, as employers cut payrolls for an eighth straight month and labour markets showed signs of accelerating decline.

The Labor Department said 84,000 jobs were lost in August, significantly higher than the 75,000 that economists surveyed by Reuters had forecast.

The banking sector was one of the top losers on the index, with UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz) falling 5.2 percent, Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) slipping 4.8 percent, Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) dropping 3.4 percent and HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) down nearly 2 percent.

Miners also weighed heavily, with BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz) down 3.3 percent, Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz) falling 4.2 percent and Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) slipping more than 4 percent. (Reporting by Atul Prakash)