Europe stocks at 2-wk closing low on economic woes

* FTSEurofirst 300 ends down 0.2 pct at two-week closing low * Banks sag as Paulson backs away from buying bad debt * Miners hit by renewed worries over global economy

By Blaise Robinson

PARIS, Nov 13 (Reuters) - European stocks fell on Thursday, declining for the fifth time in seven sessions and ending at their lowest closing level in two weeks on lingering worries over the global economy and corporate profits. The FTSEurofirst 300 .FTEU3 index of top European shares closed the roller-coaster session 0.2 percent lower at 852.55 points.

Tumbling bank stocks were the biggest drag on the market, hit by signs that the U.S. Treasury was backing away from using a $700 billion rescue fund to cleanse bank balance sheets of bad mortgage debt and focus instead on buying stakes in banks.

Shares in British lenders were among the most hammered, amid mounting worries that the UK economy faces tough times ahead.

Barclays (BARC.L) lost 6.2 percent, Royal Bank of Scotland (RBS.L) shed 6.1 percent and HBOS HBOS.L dropped 7 percent.

"In the short term, the news flow will remain negative, with more jobs destruction, falling consumer spending, etc etc. And the gloom is on both the macro and the micro fronts, with profit warnings on the rise," said Yann Lepape, economist at Oddo Securities, in Paris.

"We are reaching the worst of the recession in developed countries and fourth-quarter figures, which will be quite bad, could be the gloomiest that we will see," he said.

"But the reaction from authorities has been very bold, and on the longer term, that should prevent, in our view, the biggest risk of all: deflation."

Mining stocks, which have been dumped over the past weeks on fears that the economic slowdown would spread to emerging economies, sagged on Thursday, with Xstrata (XTA.L) losing 4.8 percent, Antofagasta (ANTO.L) falling 6.9 percent and BHP Billiton BHP.L dropping 2.3 percent.

The FTSEurofirst 300 has lost 44 percent so far this year, hit by fears that the crisis in the credit market would spark a deep global downturn.

RECESSION? DEPRESSION?

Testifying at a U.S. House Oversight and Government Reform Committee hearing on Thursday, billionaire investor George Soros said: "A deep recession is now inevitable and the possibility of a depression cannot be ruled out."

Soros said hedge funds will be "decimated" by the current financial crisis and forced to shrink their portfolios by 50-75 percent.