* FTSEurofirst 300 down 3.7 pct at close
* Societe Generale slumps 12.6 pct after results
* Swedish banks hit by rate cut, further in negative
* Rio Tinto falls after dropping dividend commitment (Updates prices at close)
By Kit Rees and Alistair Smout
LONDON, Feb 11 (Reuters) - A top European share index plunged to its lowest level in 2-1/2 years on Thursday, led down by a renewed slump in banks and commodity-related stocks, with Societe Generale sliding after disappointing results.
The pan-European FTSEurofirst 300 was down 3.7 percent at 1,195.76 points at its close, having earlier in the session slumped to its lowest level since August 2013.
The index had snapped a seven-day losing run in the previous session when it rose 1.8 percent. But an 11.3 percent slump so far in February has the index set for its biggest monthly fall since 2008, and it is down 16.6 percent so far this year.
Banks were down 6.3 percent, the top sectoral faller. The sector is down nearly 11 percent so far this week as concerns over profitability in a low-growth, low-interest rate environment have knocked confidence in the sector.
The sector has lost 28.6 percent so far in 2016.
Among the biggest fallers in the bank sector on Thursday was Societe Generale, down 12.6 percent after it posted a lower than expected rise in fourth-quarter net income, hit by an additional 400 million euros ($450.4 million) that it set aside to cover litigation costs.
Swedish banks such as Svenska Handelsbanken, Swedbank and Nordea Bank were down 4.3-5.3 percent, extending falls after Sweden’s central bank cut its benchmark repo rate by 15 basis points to -0.50 percent.
“Given our forecast that the current market turbulence will subside and that the global economy is not entering a new recession, our main scenario is that the new measures presented today were the final in this cycle,” Olle Holmgren, fixed income macro strategist at SEB, said in a note.
The bank-heavy Italian FTSE MIB index was also down 5.6 percent at its close.
Negative rates have hit banks’ ability to earn margins on interest rates and are one of several issues facing the sector.
Commodity-related stocks also fell, with the oil and gas sector down 4 percent as the price of oil slid, and the basic resources sector down 4.3 percent.
Rio Tinto dropped 3.4 percent after the miner posted an annual loss and scrapped its promise to maintain or lift its dividend annually from this year onwards due to a tough outlook.
“The most important thing out of Rio Tinto’s update is the change in dividend policy ... Its dividend yield had been a redeeming feature of the stock, even as commodities slumped, so now there’s tremendous pressure on the share price,” IG’s Madden said.
“The rate of dividend cuts at the moment is higher than in 2008. Commodity companies have been at the centre of this, but this has the potential to move out of that sector in a broader market move.”
Today’s European research round-up
Editing by Catherine Evans