* FTSEurofirst 300 falls 1.9 percent, lowest close in 2 wks
* U.S. housing data, plan to cut dollar infusions weigh
* Financials, commodity shares among top decliners
By Atul Prakash
LONDON, Sept 24 (Reuters) - European shares hit a two-week closing low on Thursday, led by banking and energy stocks on weaker U.S. housing data and after major central banks said they were scaling back some emergency lending facilities.
The FTSEurofirst 300 index of top European shares ended 1.9 percent down at 987.37 points, the lowest closing level in more than two weeks and its biggest one-day percentage decline in about 5 weeks.
The benchmark index is still up 19 percent this year and has surged 53 percent since hitting a record low in early March, but is down 40 percent from a multi-year peak scaled in 2007.
Energy shares slipped after crude oil prices dropped more than $2 towards $66 a barrel and were on track to fall nearly 7 percent this week as a surprise jump in U.S. crude and product stocks stirred doubts that prices may have run ahead of demand.
BP, BG Group, Tullow Oil, Repsol, Total and StatoilHydro shed between 1.2 percent and 3.4 percent.
The market came under pressure after data showed sales of previously owned U.S. homes unexpectedly fell in August, a minor setback for the housing market's recovery from a three-year slump.
"The housing data made the market go down. We are in an overbought territory and might see a sell-off with any excuse the market has," said Koen De Leus, economist at KBC Securities.
"I will not be surprised if we go 5 to 10 percent lower in the next weeks. If economic data continues to disappoint, something which I don't think is going to happen, then a loss of more than 10 percent in the next one to two weeks is not impossible," he added.
Across Europe, Britain's FTSE 100 index, Germany's DAX and France's CAC 40 fell 1.2-1.7 percent.
BANKS DOWN ON CENTRAL BANKS PLAN
Banks slipped to feature among the top losers after major world central banks announced that they planned to scale back massive injections of U.S. dollars into their banking systems as financial markets stabilise after a devastating crisis.
The U.S. Federal Reserve said it would begin to scale back short-term cash auctions in early 2010, while the European Central Bank, the Swiss National Bank, and the Bank of England announced they would curtail steps taken to ensure dollar liquidity.
The joint actions signalled a gradual removal of extraordinary measures central banks around the world have taken to prop up banks and financial systems during the worst period of instability since the Great Depression in the 1930s.
Standard Chartered, HSBC, Barclays, Lloyds, Royal Bank of Scotland, BNP Paribas, Societe Generale, Credit Agricole and Commerzbank fell 0.2-3.3 percent.
"Lately people have been buying (equities) for the wrong reasons and, at the same time, a large number of people have been expecting a pull-back," said Michael O'Sullivan, director and head of UK Research - Private Banking at Credit Suisse.
"I think a pull-back of 5-6 percent would be healthy."
Miners were weaker as metals prices retreated. BHP Billiton , Anglo American, Antofagasta, Rio Tinto, Xstrata and Eurasian Natural Resources fell 0.9-2.7 percent.
Swedish budget fashion retailer Hennes & Mauritz fell 4.3 percent after posting weak August sales. The world's third-biggest clothing retailer by sales said consumers were keeping a tight grip on their wallets, while price competition was tough.
Shares in Danish brewer Carlsberg dropped nearly 3 percent after the Russian government proposed to triple excise tax on beer by 2012. (Editing by Elaine Hardcastle)