FTSE tumbles 7 pct early on grow fears; banks sink

* FTSE 100 tumbles 7.1 pct early

* Financials top-weighted losers

* Energy stocks, miners sag on global recession fears (For more on the financial crisis, click on [nCRISIS])

By Dominic Lau

LONDON, Oct 10 (Reuters) - Britain's top share index tracked slides in global equities, tumbling 7 percent early on Friday, as global recession fears mounted, and investors shrugged off efforts by governments and central banks to ease strain in credit markets.

By 0730 GMT, the FTSE 100 .FTSE was down 304.9 points at 4,008.9, wiping off nearly 73 billion pounds of its market value.

The UK benchmark at one point fell to a low of 3,874.0, below the 4,000 level which was last seen more than five years ago. The index has lost nearly 19 percent so far this week, on track for its worst weekly losses since October 1987.

Insurer Aviva (AV.L: Quote, Profile, Research, Stock Buzz) was the only stock in positive territory. The insurer said on Thursday its surplus capital rose in the third quarter despite slumping stock markets and that it had reinforced its buffer against further equity market falls through increased hedging.

"It's just paralytic fear," said Manus Cranny at MF Global Spreads. "There is a certain level of fear just by the sheer size of drop of the markets in Asia.

"Also you have got to remember there are going to be redemptions with hedge funds and short-sellers have returned in America."

Cranny said people were also concerned about the possiblity of the global economy heading into depression.

Banks were the top-weighted losers, with the FTSE 350 banks index .FTNMX8350 shedding 7.9 percent.

Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz), HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz), HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) and Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz) were down between 4.3 and 21.7 percent.

U.S. stocks plunged for a seventh straight session overnight as investors bet recent moves by authorities worldwide to thaw frozen credit markets would not be enough to avert a global recession.

In Asia, Japan's Nikkei average .N225 slumped 9.6 percent -- its biggest one-day loss since the 1987 stock market crash.