* FTSEurofirst 300 index falls 2.6 pct in choppy trade
* Banks, autos suffer heavily on growth concerns
* Technical picture bearish, more declines likely
By Atul Prakash
LONDON, Sept 9 (Reuters) - European shares ended sharply lower on Friday on concerns U.S. President Barack Obama's $447 billion jobs package might face hurdles in Congress and as the resignation of a top European Central Bank official signalled a rift within the central bank.
The move by ECB Executive Board Member Juergen Stark to quit in disagreement with the bank's policy of buying euro zone government bonds to combat the currency bloc's debt crisis further hurt sentiment at a time when the role of the central bank was crucial to resolve the euro zone debt crisis.
The ECB's bond-buying programme has rescued Italy and Spain from debt crisis over the past month and there were concerns Stark's resignation over the issue could lead to some policy changes and weaken the bank's ability to deal with the crisis.
In reaction, German 10-year government bond yields hit record lows, while Italian bonds extended losses.
Markus Huber, trader at ETX Capital said that the move showed that possibly infighting was taking place within the central bank. "It could impact how the ECB reacts to the current financial crisis and to the economic slowdown, which seems to worsen as time progresses."
The FTSEurofirst 300 of top European shares ended 2.6 percent lower at 915.52 points. It hit a two-year low last month and is down 18 percent this year. The Thomson Reuters Peripheral Eurozone Index fell 6.2 percent.
"It's hard to get excited about equities when they face such considerable headwinds. The banking sector remains a dog of the stock market with investors shunning every moment they start to look like they've turned a corner," said Angus Campbell, head of sales at Capital Spreads.
Banks were the hardest hit on concerns the policymakers were not doing enough to prevent major economies moving back into recession. The European banking index fell 4.9 percent, while Societe Generale fell 10.6 percent.
The focus was on a meeting of the Group of Seven countries on Friday, with the United States pressing Europe's strongest economies to help weaker euro zone states. IMF Managing Director Christine Lagarde said advanced countries should use all available tools to boost growth.
But some analysts said Obama's ambitious plan on jobs to give a push to the struggling economy might face hurdles as a Republican-dominated U.S. House of representatives might not easily agree to the package. Analysts also question whether the plan would make a real difference.
"Markets in the end question the effectiveness of these measures. The total package that we will receive from Obama is not as big as the headline number might suggest. When you look at the employer payroll tax cuts, they are in place already," said Klaus Wiener, chief economist at Generali Investments, which manages 330 billion euros ($453 billion).
BEARISH TECHNICALS
Charts showed the trend for the Euro STOXX 50 , the euro zone's blue chip index, was down and a gap of 16 points between the lowest level on Sept. 2 and the highest point during the next trading day was providing resistance.
The index fell 4.2 percent to 2,073.67 points.
"The index still looks bearish and is looking for a retest of support at 2,046, which is 78.6 percent retracement of the rally between 2009 and 2011. If that gives way, we could be headed back to the 2009 low of 1,765," said Phil Roberts, chief European technical strategist at Barclays Capital.
Analysts said equities were cheap in terms of valuations, but investors were not rushing to buy purely on valuation grounds as the earnings outlook could also deteriorate and that could push back price-to-earnings ratios higher.
According to Thomson Reuters Datastream, the STOXX Europe 600 index carried a 12-month forward price-to-earnings ratio of 8.8, against a 10-year average of 13.2.
Automobile shares also witnessed a sharp sell-off, with the sector index falling 4.7 percent on worries a slowdown in the global economy will severely hurt demand for vehicles.
Credit Suisse kept its "more cautious" stance on the sector and advised clients to wait for improved visibility. It said globally deteriorating consumer confidence, retreating corporate expenditure and increasing capacity were not a good starting point for 2012 earnings performance.
"Valuation would suggest a strong buy signal for EU quality
names such as BMW , Daimler
On the positive side, Tullow Oil jumped more than 15 percent after announcing an oil discovery offshore French Guiana that Royal Bank of Scotland analysts called as "game changing". (Additional reporting by Harro Ten Wolde in Frankfurt; Editing by Jon Loades-Carter)
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