String loop vibrations in a central plane of a Schwarzschild black hole are investigated for various string equations of state. We discuss string loop stability and derive frequencies of vibrational modes. Using the vibrating string loop model we fit the quasi-periodic oscillation (QPO) observed in X-ray signal coming from some compact sources. We demonstrate how the string-loop parameters are related to the radial and vertical fundamental vibration modes, and how the vibrational instability can be related to the Q-factor characterizing the observed QPOs.