By Anshuman Daga

LONDON, Dec 28 (Reuters) - European equities ended down on Friday, snapping a four-day winning run in the year's last full trading session as a slump in U.S. new home sales and credit crunch worries hit markets.

Banks HSBC <HSBA.L> and Barclays <BARC.L> and drug firms GlaxoSmithkline <GSK.L> and Sanofi-Aventis <SASY.PA> figured among the main losers on a day when market volumes reached just 40 percent of the average for the last 30 days.

The pan-European FTSEurofirst 300 index <.FTEU3> index closed 0.2 percent weaker at 1,506.1 after rising nearly 2 percent in the previous four sessions.

With one half-day session set for Monday, Europe's benchmark index is up just 1.5 percent this year, recording its worst annual performance since 2002 when it tumbled over 30 percent and after jumping 16 percent in 2006.

"My impression is that we are past the point of maximum stress in the interbank markets which is a good thing," said John Haynes, equities strategist at Rensburg Sheppards Investment Management.

"But having said that, we are going to come up to the earnings season in the U.S. in the second or third week of January and it isn't going to be pretty."

Trading volume was light at about 1.1 billion shares. Some markets such as London and Paris have a half-day session on Monday while many others including Germany and Spain are closed.

U.S. stocks traded flat and sharply below session highs by the close of European trading hours.

After rising 8 percent in the first half of this year, European equities were badly bruised by credit market seizures in August following a crisis of confidence over the market value of battered risky U.S. subprime mortgages.

This severely slowed the pace of global mergers and acquisitions and strategists warned of more pain.

WINNERS AND LOSERS

The DJ STOXX banking sector index <.SX7P> shed 0.2 percent on Friday and is down 16.9 percent on the year, topping European sector losers. The DJ STOXX travel and leisure sector index <.SXTP> was the second worst performer with a loss of 16.8 percent.

"The crisis may not be waved away so easily, however, and the fallout is starting to affect the supply of corporate credit," strategists at research firm FactSet said in a note.

"It is also producing a sharp rise in the risk premium. Leverage buyouts have virtually disappeared, replaced by more traditional transactions based on industrial logic and financed with share exchanges."

Banking shares have taken a beating in the past few months due to the squeeze in global credit markets, and investors fear that financial institutions have not yet unveiled the full impact of the problems in the U.S. subprime mortgage market.

Technology firms Alcatel-Lucent <ALUA.PA> Infineon <IFXGn.DE> and STMicro <STM.PA> figured among the day's losers.

Germany's DAX index <.GDAXI> which had a truncated session, rose 0.4 percent, UK's FTSE 100 index <.FTSE> declined 0.3 percent and France's CAC 40 <.FCHI> ended flat.

On the year, the DAX rose 22 percent, matching last year's gains. The FTSE 100 edged up 4 percent versus a nearly 11 percent jump last year and the CAC 40 advanced 1.5 percent compared with a 17.5 percent rally in 2006.

Spain's Ibex index <.IBEX> closed the day 0.5 percent weaker, taking its full-year gain to 7.3 percent. This was sharply below last year's stellar performance when a flurry of M&A activity pushed the index up 32 percent.

A Reuters poll of 14 brokers forecast the Ibex would regain momentum next year and rise 12 percent.

(Additional reporting by Jane Barrett; Editing by David Cowell)

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Keywords: MARKETS EUROPE STOCKS