* FTSEurofirst 300 down 0.2 pct; down 2.5 pct on week
* Euro STOXX 50 hits lowest close since late November
* Results show after close that 8 banks failed stress test
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By Blaise Robinson
PARIS, July 15 (Reuters) - European stocks slid on Friday and posted their biggest weekly loss in four months, with peripheral European shares knocked lower ahead of the results from Europe's bank stress tests which came out after the bell.
Of 90 banks tested, five in Spain, two in Greece and one in Austria failed, while all big banks passed.
"All Italian banks have passed the test. This is reassuring for the euro zone, and the overall number of banks that have failed the test seems somewhat lower than what the market had expected," Saxo Banque trader Geraud Missonnier said.
"Overall, we don't see much impact from this on the equity market, it's been priced in."
The European Banking Authority (EBA) said the tests, which made lenders reveal for the first time their profit forecasts, a breakdown of their sovereign bond holdings and funding costs, showed the failed banks would need 2.5 billion euros ($3.5 billion) in fresh capital, way below what most analysts had expected.
"With only eight banks failing and the requirement for these banks to raise 2.5 billion euros, it wasn't the solution to restore confidence," Daiwa Capital Markets credit analyst Michael Symonds said.
"What was needed was for more banks to fail and for more capital to ultimately be raised.
"That said, I don't think people expected that outcome. But the solution to the wider sovereign/bank malaise in Europe needs to go beyond pumping more capital into the continent's banks. That's the underlying message, the solution's gone beyond that."
The FTSEurofirst 300 index of top European shares closed 0.2 percent lower at 1,086.90 points, posting a weekly loss of 2.5 percent, the index's heaviest weekly fall since mid-March.
The euro zone's blue-chip Euro STOXX 50 index ended the session down 0.7 percent at 2,675.38 points, its lowest close since last November. The index suffered a weekly loss of 4.1 percent, its biggest weekly retreat in 14 months.
Spain's IBEX 35 index dropped 1.2 percent and Italy's FTSE MIB fell 1 percent.
Europe's banking index -- which has tumbled 25 percent since mid-February -- shed 1 percent on Friday, with Commerzbank down 3 percent and Credit Agricole down 3.1 percent ahead of the stress test results.
Investors turned instead to defensive stocks on Friday, with Sanofi rising 1.3 percent and GlaxoSmithKline adding 0.9 percent.
(Additional reporting by Simon Jessop in London, Reporting by Blaise Robinson; Editing by David Hulmes)
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