(REPEATS for additional subscribers (ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets))
* FTSE 100 vs FTSE 250: reut.rs/28XsrMt
* FTSE 250 down over 10 pct in last two days
* FTSE 250 most exposed to fears of UK recession
* OneSavings, Shawbrook, Virgin Money shares slump
By Sudip Kar-Gupta
LONDON, June 27 (Reuters) - Shares in domestically focused mid-size British companies suffered the heaviest selling among European stocks on Monday as increasing worries over economic growth after last week's Brexit sent investors rushing for the exits.
The FTSE 250 mid-cap index tumbled 6 percent, outstripping the 2 percent drop on the blue-chip FTSE 100 equity index and a 3.1 percent fall on the broader, pan-European STOXX 600 index.
The mid-cap index was also at its lowest level since late 2014.
The FTSE 250 companies are more reliant on the domestic economy and consumer spending than the large, multinational companies that dominate the FTSE 100, who may even benefit from the post-Brexit slump in sterling as a weaker pound makes their exports more affordable overseas.
The 250 index slumped 7.2 percent on Friday in the immediate aftermath of Britain's vote to leave the European Union.
Monday's decline wiped another 22 billion pounds ($29 billion) off the value of companies in the index.
While the weaker pound may buoy exporters, it could weaken domestic consumer confidence in Britain and thereby hurt the companies in the FTSE 250.
"The reaction of the FTSE 250 companies shows how fears are building up about a British economic recession," said Horizon Stockbroking director Kyri Kangellaris.
This was reflected on Monday in slumps in property and housebuilding shares, which in turn hit domestically focused British banks that typically rely on consumer loans and mortgage lending.
"We expect that lower confidence and house prices will temper loan demand," said RBC Europe analyst Robert Noble.
Mid-cap banks OneSavings, Shawbrook and Virgin Money all fell more than 20 percent.
Mid-cap housebuilding and construction companies such as Bellway, Crest Nicholson and Marshalls also lost around a fifth of their stock market value.
Shares in London-based estate agency Foxtons also dropped 20 percent, after Foxtons said Britain's decision to leave the EU was likely to prolong uncertainty in the property market.
Another victim from fears about the hit to the UK economy was furniture retailer DFS, which slid 17 percent.
Analysts at brokerage N+1 Singer said they were re-assessing earlier bullish calls on the UK housing and retail sectors.
"At the start of the year, we talked about selective continued strength in the housing market, the strength in construction markets and resilient consumer/retail markets - the Brexit vote calls these assumptions increasingly into question." ($1 = 0.7597 pounds) (Reporting by Sudip Kar-Gupta; Editing by Vikram Subhedar and Hugh Lawson)