European shares fall 2.4 pct; erase 2009 gains

* FTSEurofirst 300 falls 2.4 pct, erases 2009 gains

* Banks, electricity stocks top losers

* Commodity stocks track weaker crude, metals prices

By Atul Prakash

LONDON, Jan 13 (Reuters) - European shares fell for a fifth straight session on Tuesday, led lower by banks, electricity and commodity stocks, as worries about a tough earnings season grew after aluminium giant Alcoa (AA.N) posted a fourth-quarter loss.

At 1005 GMT, the index of top European shares was down 2.4 percent at 832.79 points after hitting a low of 831.96 points -- a level below last year's closing point. The benchmark lost 45 percent in 2008.

The banking sector took the most points off the index, with Barclays (BARC.L) falling 8.3 percent, HBOS HBOS.L down 4.2 percent, Royal Bank of Scotland (RBS.L) declining 5.3 percent and UBS (UBSN.VX) slipping 6 percent

Electricity companies were also hurt. EDF (EDF.PA), Enel (ENEI.MI), International Power (IPR.L) and Renewable Energy (REC.OL) were down 1.7-7 percent.

"We have to get through a very tough earnings season," said Jonathan Lawlor, head of European research at Fox-Pitt, Kelton, adding that the banking sector was expected to face more headwinds in the first half of this year.

"We believe regulators and central banks will do everything to avoid a depression and may well in due course move to quantitative easing," he added.

Kicking off the earnings season, U.S. miner Alcoa posted a wider-than-expected loss late on Monday, as the global economic slump dampened demand for its aluminium products.

In Tokyo, Sony Corp (6758.T) shares tumbled after a source with knowledge of the matter said the Japanese electronics and entertainment conglomerate will likely suffer an operating loss of about $1.1 billion due to sluggish sales and a stronger yen.

Concerns about huge credit losses at Citigroup (C.N) dragged its stock 17 percent lower in the previous session. The Wall Street Journal said Citigroup could post more than $10 billion in fourth-quarter operating losses.

Across Europe, the FTSE 100 index .FTSE, Germany's DAX .GDAXI and France's CAC 40 .FCHI fell 1.9-2.4 percent.

COMMODITY SHARES DROP

Oils shares tracked crude prices that fell 2.7 percent. BP (BP.L), Royal Dutch Shell (RDSb.L), gas producer BG Group (BG.L) and Tullow Oil (TLW.L) lost between 0.4 and 7.4 percent.

Miners also retreated with a sharp decline in metals prices. BHP Billiton (BLT.L), Anglo American (AAL.L), Vedanta Resources (VED.L), Xstrata (XTA.L), Antofagasta (ANTO.L) and Rio Tinto (RIO.L) fell between 3.6 and 8.7 percent.

France's largest carmaker, PSA Peugeot Citroen (PEUP.PA), fell nearly 4 percent after it reported an 8.7 percent fall in full-year vehicle sales as the credit crunch and worsening economic outlook battered global auto markets.

A trio of surveys showed that Britain's economy went into steep decline at the end of last year when consumers tightened their belts, businesses slashed jobs and the housing market ground to a virtual standstill. [ID:nLC480750]

Britain's biggest retailer Tesco Plc (TSCO.L) also felt the impact of the economic downturn as it reported the smallest rise in Christmas sales at UK stores open at least a year since the early 1990s.

Deutsche Bank (DBKGn.DE) was trying to renegotiate terms of a deal to acquire Deutsche Postbank (DPBGn.DE) due to a sharp decline in the German retail bank's share price, a German newspaper reported.

Deutsche Bank fell 0.8 percent, while Deutsche Postbank was up 1.8 percent. (Editing by Simon Jessop)