* FTSEurofirst 300 falls 0.7 percent
* Rallying crude prices stoke inflation, growth fears
* Carmakers, travel firms among fallers
By Harpreet Bhal
LONDON, Feb 24 (Reuters) - European shares extended this week's losses as the lingering crisis in Libya sparked an $8-per-barrel jump in Brent crude, fanning further concern about its impact on inflation and growth.
By 1207 GMT, the FTSEurofirst 300 index of top shares was down 0.7 percent at 1,143.78 points. The index is down 3.6 percent this week, after five straight losing sessions since a market rally ended Feb. 18.
Brent crude futures surged to their highest since August 2008 on supply concerns arising from the crisis in oil-rich Libya, stoking fears higher raw materials costs will further erode company margins at a time of rising inflation.
"The problem with civil unrest is that we don't really know when it's going to end. It might get worse and the supply of oil might come down even more, and that's a big concern for the market," said Sebastian Lynar, sales trader at IG Index.
Daily oil production in Libya has fallen by 1.2 million barrels because of the unrest, ENI CEO Paolo Scaroni said, adding it has caused a sense of uncertainty. The country produces 1.6 million barrels per day.
Muammar Gaddafi was clinging to power on Thursday as rebels seized important towns in the west of Libya.
Carmakers were lower on the back of the higher crude prices, with the STOXX Europe 600 Automobiles & Parts down 1.7 percent.
Lufthansa fell 1.5 percent and International Consolidated Airlines Group -- formed from the merger of British Airways and Iberia -- shed 3.2 percent.
The STOXX Europe 600 travel and leisure index has shed 5.6 percent this week, while the STOXX Europe 600 Automobiles & Parts index is down 5.3 percent in that period.
"Oil prices will have a knock-on effect on a lot of sectors. We have seen autos and airlines taking a big hit because it will have an impact their bottom line," Lynar said.
Within the sector, Porsche fell 8.6 percent after the carmaker said a planned merger with Volkswagen will be delayed by a widening investigation into former board members.
LOSING POWER
Germany's RWE, Europe's fifth-largest utility, fell 5.5 percent after saying it will cut investments and sell assets to counter a worsening profit outlook.
"Despite slightly better than expected results, RWE is the biggest loser in the (DAX) index owing to rising energy costs and slowing economic growth leading to a drop in demand," said Anita Paluch, sales trader at ETX Capital.
German gross domestic product (GDP) grew 0.4 percent in the fourth quarter, powered by foreign trade.
In the banking sector, Royal Bank of Scotland fell 4.4 percent after high bad debt charges in Ireland and a drop in investment banking income overshadowed the bank's return to profit in the final months of 2010.
French peer Credit Agricole rose 3.8 percent after it dismissed fears it would have to raise new capital to meet tougher Basel III banking rules.
A survey by the European Commission showed a sharp increase in consumer price inflation expectations for the next 12 months, coinciding with the European Central Bank's (ECB) intensifying rhetoric in recent weeks on the risks of rising prices.
(Editing by David Hulmes)