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Political tensions put European shares on track for worst week of 2017

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  1. LONDON, Aug 11 (Reuters) - A sell-off among heavyweight basic resources stocks heightened the third day of losses for European shares and put them on track for their worst week this year as ratcheting political tensions dented equities worldwide.

    The pan-European STOXX 600 .STOXX fell 0.7 percent, taking its weekly losses to 2.4 percent, its worst since early November last year.

    Euro zone stocks and blue-chips .STOXX50E also dropped 0.7 percent, while the miner-heavy FTSE .FTSE underperformed and was down 0.8 percent.

    Eurostoxx volatility .V2TX , the main European gauge of equity investor anxiety, jumped to a near four-month high, though it remained near historically depressed levels.

    Asian and U.S. equity markets had extended their sell-off overnight as a war of words between the U.S. and North Korea intensified.

    On Friday basic resource stocks .SXPP dropped 2.6 percent to a month low as Chinese base metal prices collapsed as political pressures took their toll.

    Rio Tinto RIO.L , Glencore GLEN.L , Antofagasta ANTO.L , Anglo American AAL.L , BHP Billiton BLT.L and Arcelormittal all fell 2.3 to 4.1 percent.

    Falling crude prices made oil & gas stocks .SXEP a weight too, dropping 1 percent with Tullow Oil TLW.L the top faller.

    Banks .SX7P also fell 0.9 percent, putting the index on track for its worst week in nine months.

    UK mid-cap Dixons Carphone was the worst-performing on the STOXX, falling 7.6 percent after a top-rated Exane BNP Paribas analyst cut the retailer by two notches to "underperform", citing concerns about its mobile business.

    The probability of a market correction is increasing, HSBC's European equity strategists said. The MSCI Europe index has enjoyed a 406-day run of near uninterrupted gains, which they said was its second-longest stretch in the post-crisis bull market.

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