(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window)

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FTSE 100 down 1.3%, FTSE 250 down 1.6%

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Financial stocks slump

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Low oil prices hurt energy stocks

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Industrial stocks fall tracking European counterparts

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Pearson jumps on stronger growth forecasts

Oct 17 (Reuters) -

London's benchmark index hit a two-week low on Friday,

weighed down by losses in oil majors and heavyweight lenders

that joined a global selloff in financial stocks on concerns

over the health of U.S regional banks.

The benchmark FTSE 100 fell 1.3% to 9,310 points as

of 1017 GMT, while the domestically focused FTSE 250

dropped 1.6% to 21,643.

Both indexes were on course for their second consecutive

week of losses.

The index of banking sector shed nearly 3%.

HSBC ( HSBC ), Barclays ( BCS ) and Standard Chartered ( SCBFF )

fell 1.9%, 5.3% and 4.6% respectively.

The investment banks and brokerages index

fell 2%; brokerage ICG shed 6.4%, the biggest decline

in the FTSE 100.

Among U.S. regional banks, Zions Bancorporation

disclosed a $50 million hit from two loans from its California

unit, while Western Alliance said it had initiated a

lawsuit alleging fraud by Cantor Group V, LLC, fuelling worries

about credit quality.

Wall Street futures pointed to a weaker open on Friday

following Thursday's drop.

On the FTSE 100, oil majors BP and Shell

declined 2.7% and 0.9%, respectively, weighing heavily on the

index, as global risk-off mood hurt oil prices.

Britain's economy returned to growth in August, data on

Thursday showed. Separately, the International Monetary Fund

earlier this week said UK's economy is on course for the

second-fastest growth among the Group of Seven nations in 2025

after the U.S.

The aerospace and defense index dropped 3.1%,

tracking losses in their European counterparts.

Among individual stocks, Pearson gained 5.3% to the

top of FTSE 100 as the education company expects stronger sales

growth in the fourth quarter.

Man Group ( MNGPF ) gained 4% after the hedge fund's growth in

assets under management surpassed expectations.