LONDON (Reuters) - European Union carbon permits were down more than 5 percent in afternoon trading on Thursday, depressed by continued worries of an economic slowdown and a glut of CO2 permit supply.

Front-year carbon permits called EU Allowances (EUAs) traded at 7.88 euros a tonne at 1643 GMT, down 47 cents on the day and erasing the previous day's 5-percent gain.

"The momentum is pretty negative," one carbon trader said, citing weakness in the energy complex, notably Brent crude and German power prices.

Front-month Brent crude was down 1.7 percent at $108.62 a barrel, while the German power 2012 baseload contract was off 1.3 percent at 52.68 euros/MWh.

Brent and U.S. crude oil futures extended losses on Thursday as signs of further economic slowdown in Europe and a weaker factory sector in China outweighed better-than-expected U.S. manufacturing data.

On the supply front, traders expect the European Investment Bank to start this week or next the first sales from its pot of 300 million EUAs from a post-2012 reserve for new entrants.

"We saw a bounce in the market yesterday... but the overhang of supply is a major threat to the market and any increase in prices can be short-lived," said a carbon trader at a financial institution.

Traders were also busy rolling or switching their positions ahead of deliveries for forwards in the over-the-counter market this week. Futures contracts on exchanges will not be delivered until later in the month.

Benchmark carbon prices have shed more than half their value since June, hitting a record low of 6.90 euros on Nov. 25.

The euro zone's worsening debt crisis has choked demand for emissions permits, while many analysts don't expect demand to outpace supply in the EU carbon market until 2020.

U.N.-issued carbon credits, which come from accredited emission reduction projects in developing countries, struck record lows last week.

The December 2011 certified emission reduction (CER) was down more than 6 percent at 5.26 euros on Thursday, but above its all-time low of 4.53 euros on Nov. 25.

($1 = 0.7429 euros)

(Reporting by Jeff Coelho; editing by James Jukwey and Alison Birrane)