* FTSEurofirst 300 index drops to 26-mth low
* Banks hit lowest level since March 2009
* German's DAX falls under 5,000 level
By Joanne Frearson
LONDON, Sept 12 (Reuters) - European shares hit a 26-month low on Monday, led by financials on concerns that policymakers are failing to find a permanent solution to the euro zone sovereign debt crisis and as fears of a Greek default intensified.
French banks, which have high exposure to debt issued by peripheral euro zone countries, were particularly hard hit on worries that they could be downgraded by credit ratings agency Moody's after a three-month review.
BNP Paribas , Societe Generale and Credit Agricole fell between 11.1 and 12 percent.
The STOXX Europe 600 Banks index was down 4.7 percent, the worst-performing sector, reaching its lowest level since March 2009.
Compounding investors' worries was the lack of detail on steps to boost the struggling economies from a meeting of the Group of Seven finance chiefs over the weekend, while German politicians were increasingly talking about a potential Greek default.
"This is clearly not good news for the market. It is bad news for the banks and the equity markets; it just keeps them under pressure," said Mike Lenhoff, chief strategist at Brewin Dolphin.
By 0809 GMT, the pan-European FTSEurofirst 300 index of top shares was down 3.3 percent at 885.15 points after dropping 2.6 percent on Friday when German policymaker Juergen Stark quit the European Central Bank's board due to divisions over its bond-buying programme.
The German DAX was down 3.3 percent at 5,019.58 having earlier dropped to 4,993.07. (Reporting by Joanne Frearson; Editing by Will Waterman) ============================================================ For rolling updates on what is moving European shares please click on ============================================================ For pan-Europeanmarket data and news, click on codes in brackets: European Equities speed guide................... FTSEurofirst 300 index.............................. STOXX Europe index.................................. Top 10 STOXX sectors........................... Top 10 EUROSTOXX sectors...................... Top 10 Eurofirst 300 sectors................... Top 25 European pct gainers....................... Top 25 European pct losers........................
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