* Senate Republicans tap Kyl, Portman, Toomey

  * House Republicans name Camp, Hensarling, Upton

  * Three slots remain to be filled by House Democrats (Adds House Republican announcements, background)

  WASHINGTON, Aug 10 (Reuters) - Republicans named their six members to a U.S. congressional deficit-reduction super committee on Wednesday, setting the stage for an attempt to create bipartisan agreement on taxes and government spending.

  Senators Jon Kyl, Rob Portman and Patrick Toomey were selected by Senate Republican Leader Mitch McConnell.

  House of Representatives Speaker John Boehner, the top Republican in Congress, named Representatives Dave Camp, Jeb Hensarling and Fred Upton to the committee.

  The panel is known as the Joint Select Committee on Deficit Reduction and was established to find $1.5 trillion in additional budget saving over 10 years.

  Expectations for a fiscal policy breakthrough by the panel were on the rise as markets whipsawed through the week following a historic downgrade of U.S. debt and a deal to raise the U.S. debt ceiling that postponed tough decisions.

  Senate Democrats were first out of the gate on Tuesday with their appointments to the 12-member panel. They were Senators Max Baucus, John Kerry and Patty Murray, a trio that analysts said sent a mixed message about the panel's potential.

  Only three more slots on the panel remained to be filled by House Democratic Leader Nancy Pelosi.

LONDON, Aug 10 (Reuters) - European shares ended sharply down on Wednesday, led lower by a steep sell-off in banking shares, with Societe Generale down more than 21 percent at one point on a slew of rumours about the bank.

  A SocGen spokeswoman categorically denied all rumours relating to the bank's financial solidity, but the bank's shares were still down 14.7 percent after hitting a 2-1/2-year low and witnessing their biggest daily percentage decline in more than two decades. Credit Agricole fell 11.8 percent, while the European banking index was down 6.5 percent.

  " We are running short of triple-A countries. If France is downgraded, that raises issues about other countries as well. Fundamentally public finances are not very strong," said Klaus Wiener, chief economist at Generali Investments, which manages 330 billion euros ($469 billion).

  " It's very unfortunate to see all this action at this point in time when we have a very fragile market environment."

  The FTSEurofirst 300 of leading European shares provisionally finished 3.8 percent lower at 911.65 points. France's CAC 40 index slipped 5.5 percent. (Reporting by Atul Prakash)

KHARTOUM (Reuters) - Sudan has granted its main ally and oil buyer China more oil exploration rights as both countries seek to boost ties, Sudan's foreign minister said.

  On Monday, Chinese foreign minister Yang Jiechi visited Khartoum in the first high-level visit of a Chinese official since South Sudan became independent last month during which he assured continued support.

  " (Sudan's) President (Omar Hassan) al-Bashir told the Chinese minister that Chinese firm (China National Petroleum Corp) CNPC will be granted the right to explore oil in three new blocs," Sudan's foreign minister Ali Ahmed Karti told reporters late on Monday.

  He spoke after Yang had met Bashir before leaving on Tuesday for talks in the southern capital Juba.

  Karti said China has committed itself to develop more than one new oil field in Sudan, without giving details.

  China, which has been aggressively pursuing natural resources in Africa, has maintained close ties with Sudan throughout a U.S. trade embargo. North Sudan was the sixth-largest source of Chinese oil imports in 2010.

  Most Sudanese oil is located in South Sudan, but exports to China and elsewhere have to pass through pipelines and a seaport located in the north, which gives export customers an incentive to promote good relations between the two Sudans.

  President Bashir has been shunned by Western countries since being indicted by the International Criminal Court in the Hague for war crimes and genocide. China opposes the indictment.

 

* King strikes dovish tone, sees end to inflation spike

  * Rate hikes unlikely for long time given global turmoil

  * No strong signal that QE2 is imminent (Adds detail, analyst reaction)

  By David Milliken and Sven Egenter

  LONDON, Aug 10 (Reuters) - The Bank of England cut its growth forecasts on Wednesday, left the door open for a second bout of quantitative easing and signalled interest rates will stay at record lows for a long while to come.

  BoE Governor Mervyn King stopped short of following the U.S. Federal Reserve, which said it was likely to leave rates near zero for another two years, committing neither to keep rates on hold indefinitely or to conduct further government bond purchases with new money.

  But he did say British growth faced major downward risks -- especially if the euro zone debt crisis worsens -- and market endorsed forecasts that pencil in barely any rate increases before the end of next year.

  " Since we last met, the mood in markets has taken a sharp turn for the worse," King told a news conference. " There are a number of headwinds to world and domestic growth over the forecast period, not least the public and private debt overhang, and these headwinds are becoming stronger by the day."

  The Fed, as well as its comments on rates, said on Tuesday it would also consider further steps to help growth, while the European Central Bank overcame some internal opposition to begin buying the bonds of debt-laden Italy and Spain this week.

  King would not make a two-year commitment on rates but noted that markets were already pricing in only one quarter-point rate rise by the end of 2012.

  That, and his emphasis on the downside risks, pushed British 10-year government bond yields to a record lows of barely 2.5 percent.

  " The tone of the report is much softer than we expected," said Jens Larsen, economist at Royal Bank of Canada. " The MPC comes very close to endorsing current market (rate) expectations ... and the report also brings back the prospect of further asset purchases."

  Economists at Royal Bank of Scotland estimate there is now a 40 percent chance of more quantitative easing next year, while RBC views it more as an option if the euro zone crisis deepens markedly.

  The BoE bought 200 billion pounds of British government bonds with newly created money between March 2009 and February 2010, and King said that further asset purchases could still prove effective in a crisis.

  " We are not out of tools," he said.

  But he warned that monetary policy could only do so much to relieve the pain of the economic reforms needed after the financial crisis.

  " There are limits to what monetary policy can do. There are significant adjustments that have to be made in every major economy, not just the UK," he said.

 

  INFLATION HIGH, THEN FALLING

  The BoE forecast that inflation would peak around 5 percent later this year -- the same as it predicted in May -- before falling steadily to 1.8 percent in two years time, a shade lower than it expected three months ago.

  Upside risks remain to the forecast, but the BoE sees a stronger chance that it will meet its 2 percent inflation target within the next two years than it did three months ago.

  This fall in the inflation forecast comes despite the fact that much less monetary tightening is factored into the BoE's forecasts than in its May projections.

  Short-term market interest rates are only predicted to rise to 0.8 percent by the end of 2012 -- implying just one quarter point increase in official rates, compared to a 1.7 percent rate in May's forecast.

  There appeared to be more consensus on the 9-member Monetary Policy Committee than three months ago, with the report noting " a range of views" about the outlook on growth and inflation, rather than the " wider than usual" range referred to in May.

  The BoE said there were substantial downside risks to Britain's economic recovery, the biggest of which came from the euro zone fiscal crisis.

  " Were they to crystallise, the risks emanating from the euro area have the potential to have a significant impact on the UK economy," the BoE said. The damage caused was hard to quantify, and therefore could not be fully factored into forecasts.

  Nonetheless, it still cut its growth forecast for 2011, and to a lesser degree, going forward. By the fourth quarter of 2011, the BoE now sees an annual rate of growth of 2.0 percent, down from 2.5 percent in May -- translating to full-year growth for 2011 of about 1.4 percent.

  Growth is likely to be a little over 2 percent next year, and after two years, it is forecast to be running at an annual rate of around 2.7 percent, a fraction lower than in May's forecasts.

  But the BoE still sees the economy struggling to make up the ground lost in Britain's 2008-09 recession, with a growing likelihood that there has been lasting damage.

  " The MPC continue to expect that the level of GDP in coming years will stay far short of the pre-recession trend," said Citi economist Michael Saunders. " In other words there has been a sizeable and lasting loss of potential GDP, implying a permanent erosion of living standards." (Addtional reporting by Matt Falloon, Olesya Dmitracova and Peter Griffiths editing by Mike Peacock)

* Fears of trouble in French banking sector hit stocks

  * Economy worries persists after stocks' snap-back rally

  * Indexes off: Dow 3.8 pct, S& P 3.6, Nasdaq 3.4 pct (Updates to midday, changes byline)

  By Chuck Mikolajczak

  NEW YORK, Aug 10 (Reuters) - Wall Street stocks fell sharply on Wednesday, erasing most of the previous day's gains, on fears of trouble in the French banking sector, which has significant exposure to shaky European debt.

  U.S. financial stocks led the decline on worries any French bank problems could spread to them. The KBW bank index slid 7 percent. Large financial institutions fell sharply, including Bank of America Corp down 11.2 percent to $6.76.

  A Societe Generale spokeswoman denied rumors of trouble, but French banks were hit hard in Paris trading. Societe General, where U.S. traders have focused their attention, fell 21 percent and BNP Paribas lost 13 percent.

  " Memories are fresh. People who during the last financial crisis did not sell right away, next time around are ready to sell quick and ask questions later. People are seeing this as 'next time,'" said Ed Crotty, chief investment officer at Davidson Investment Advisors in Great Falls, Montana.

  Stocks rallied on Tuesday after the Federal Reserve promised to keep interest rates near zero for at least two more years. The S& P 500 index had its best performance in more than two years.

  The Dow Jones industrial average dropped 422.73 points, or 3.76 percent, to 10,817.04. The Standard & Poor's 500 Index slumped 42.30 points, or 3.61 percent, to 1,130.23. The Nasdaq Composite Index lost 83.13 points, or 3.35 percent, to 2,399.39.

  The CBOE Volatility index jumped 24.8 percent, representing the third session in the last five the index has seen a jump of at least 20 percent.

  Walt Disney Co was among the worst performers on the Dow, tumbling 11.2 percent to $30.80 a day after the company's quarterly results failed to reassure investors the entertainment company could do well in a weak U.S. economy.

  Even after Tuesday's snap-back rally, the S& P 500 is down nearly 18 percent since a peak at the start of May. Worries about the U.S. economy and high levels of public debt in Europe have sent stock cascading over the last two weeks. (Reporting by Chuck Mikolajczak Additional reporting by Ashley Lau Editing by Kenneth Barry)

* Fears of trouble in French banking sector hit stocks

  * Economy worries persists after stocks' snap-back rally

  * Indexes off: Dow 3.1 pct, S& P, Nasdaq 2.9 pct (Updates to midmorning)

  By Edward Krudy

  NEW YORK, Aug 10 (Reuters) - Wall Street stocks fell sharply on Wednesday on fears over possible trouble in the French banking sector that has large exposure to shaky peripheral European debt.

  U.S. financial stocks led the decline as the KBW bank index slid 6.2 percent. Large financial institutions fell sharply, with Bank of America Corp down 12.2 percent to $6.93.

  French banks were hit hard in Paris trading. Societe General, where U.S. traders have focused their attention, fell 16 percent. BNP Paribas fell 13.2 percent.

  " France owns $350 billion worth of Italy's debt on their banks' books," Dave Rovelli managing director of U.S. equity trading at Canaccord Adams, who said fears of a failure in the sector were hitting U.S. markets.

  The Dow Jones industrial average dropped 342.96 points, or 3.05 percent, to 10,896.81. The Standard & Poor's 500 Index fell 33.66 points, or 2.87 percent, to 1,138.87. The Nasdaq Composite Index shed 72.56 points, or 2.92 percent, to 2,409.96.

  Indexes gave up much of Tuesday's snap-back rally. The S& P 500 is down nearly 18 percent since a peak at the start of May. Worries about the U.S. economy and high levels of public debt in Europe have sent stock cascading over the last two weeks.

* Brent crude bounces after move below $100

  * Copper also rebounds after hitting 8-month low

  * Gold hits string of records, touches $1,778

  * China inflation hits 3-year high at 6.5 pct (Recasts with more quotes, updated prices)

  By Eric Onstad and Manolo Serapio Jr

  LONDON/SINGAPORE, Aug 9 (Reuters) - Most commodities bounced back on Tuesday from steep losses in volatile markets as investors hoped the U.S. Federal Reserve would announce steps to boost the economy and stave off global recession.

  Brent crude oil clawed back from a six-month low into positive territory, while copper pulled away from an eight-month low as bargain hunters prowled the markets. Gold touched successive all-time peaks as jittery investors sought a safe haven.

  The 19-commodity Reuters-Jefferies CRB index rose 0.7 percent after tumbling on Monday to its lowest level in nearly eight months.

  The downgrade of the United States' credit rating on Friday, along with a raging debt crisis in Europe, triggered a sell-off that had knocked nearly 10 percent off the price of U.S. crude in just two days and sent other commodities tumbling.

  But markets bounced on hopes the U.S. central bank would signal later in the day it would take additional steps to stimulate the economy following previous shots of liquidity through so-called quantitative easing (QE).

  The Fed will deliver its policy statement around 2:15 pm (1815 GMT).

  The market would likely be wary of any stimulus after previous rounds only temporarily boosted asset prices without addressing underlying problems in the economy, said said Sean Corrigan, chief investment strategist at Diapason Commodities Management in Switzerland.

  " Given the signal failure of the last QE2 to do anything other than push prices up for ordinary people... there's a different level of expectation about its efficacy and advisability," he said.

  " One doesn't want to heap too much extra bearishness on a world which has had a bit of a shock in its expectatations over the past couple of weeks, but to me this is a market catching up with the underlying reality."

  Investors have been counting on China's economic strength to support commodity demand when the Western world is on shaky ground. But data on Tuesday showing China's inflation, speeding to a higher-than-forecast 6.5 percent in July, suggests Beijing may have limited room to stimulate domestic growth.

  " It's crucial for commodity markets that China doesn't slide. Fears of a China slowdown would really take the wind out of the markets," said Citigroup analyst David Thurtell.

 

  OIL REBOUNDS

  In a whipsaw market, oil prices plumbed fresh depths on fears about a global recession before reversing direction.

  The worries about global growth and the impact on commodities demand pushed Brent crude briefly below the $100 per barrel level.

  " The underlying fundamental is that demand in Europe and the U.S. is not strong, we have a sell off in equities and confidence in the global recovery has been hit again," said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland.

  Brent crude < LCOc1> fell as much as $5 to $98.74 a barrel, the lowest intraday price since Feb. 8, before erasing losses and trading 0.3 percent higher at $104.08 by 1350 GMT, still over $20 off an April peak above $127.

  U.S. crude < CLc1> plunged nearly 7 percent to $75.71, its lowest since September 2010 before also bouncing. At one point, U.S. crude's discount to Brent < CL-LCO1=R> rose to its highest ever, reaching a peak of $23.76.

  Industrial metals also rallied as copper bounced from eight-month lows, bolstered by consumer buying.

  Benchmark three-month copper on the London Metal Exchange rebounded from $8,446.25, a fall of 4.7 percent, its lowest level since early December 2010, to gain 0.4 percent.

  Aluminium rose 1.7 percent to $2,419 a tonne and nickel added 1.5 percent to $21,575.

  " Regardless where you are, some of these commodities do represent a reasonable value," said Jonathan Barratt, managing director of Sydney-based Commodity Broking Services.

 

  GOLD ROARS AHEAD

  Early in the day when other markets were deepening losses, gold kept up its blistering rally, staging its biggest three-day rally since late 2008 during the global financial crisis.

  Spot gold hit a record $1,778.30 an ounce as investors sought refuge in the safe haven asset from chaos in other markets. That marked its 12th record in 20 sessions.

  As other markets recovered, gold pared gains to around $1,735 an ounce.

  " The market could come off from here, but it's headed in a northerly direction," said ANZ head of metal sales Peter Hillyard. " From where we are now, you might think we could see some sort of pull-back. But I'm talking about a momentary thing, a pull-back like the loading of a gun, which then fires away."

  In agricultural markets, U.S. wheat recovered from losses as low prices generated buying interest, while corn and soybeans pulled back from their lows.

  " I have also seen a steady stream of buying orders for wheat on my desk as people view the present low market as a buying opportunity," a European trader said.

  Sugar, coffee and cocoa futures also rebounded.