* FTSEurofirst 300 down 1.1 percent; set to end month lower
* Automobile, energy shares among top decliners
* Technical picture bearish as index hovers near key level
* For up-to-the-minute market news, click on []
By Atul Prakash
LONDON, Aug 31 (Reuters) - European shares fell in early
trade on Tuesday and remained on track to end the month lower as
growing concerns about the pace of global economic recovery kept
investors on the sidelines.
Carmakers were among the top decliners as investors feared a
gloomier economic outlook would hit consumer spending.
The European automobile and parts index <.SXAP> dropped 1.4
percent, while BMW <BMWG.DE>, Daimler AG <DAIGn.DE>, Peugeot
<PEUP.PA> and Fiat <FIA.MI> fell 0.9-2.2 percent.
At 0809 GMT, the FTSEurofirst 300 <> index of top
European shares was down 1.1 percent at 1,014.22 points after
falling 0.1 percent in the previous session. The index is down
2.7 percent so far this month.
"If you look at all the noise, all the volatility and all
the nervousness, it is clear that this market has one major fear
at the moment and that is the double dip," said Philippe
Gijsels, head of research at BNP Paribas Fortis Global Markets.
"And we are not going to have the answer to that one until
the fourth quarter. There is more downside risk for equities
over the next couple of weeks."
Gloomy reports on U.S. gross domestic product and housing
have raised fears the economy could slip back into a recession
or face a lengthy period of growth too slow to make much of a
dent in the country's 9.5 percent unemployment rate.
Investors remained cautious ahead of this week's closely
watched U.S. data on manufacturing, services and the August
non-farm payrolls report, which are expected to confirm the
economy's growth is slowing.
A steep drop in oil prices <CLc1> on expectations of higher
crude inventories and worries about a weakness in oil demand
hurt energy shares. The STOXX Europe 600 oil and gas index
<.SXEP> fell 1.2 percent, while Royal Dutch Shell <RDSa.L>, BG
Group <BG.L> and Tullow Oil <TLW.L> dropped 1.3-1.5 percent.
BEARISH TECHNICAL PICTURE
The technical outlook appeared bearish after the Euro STOXX
50 <>, the euro zone's blue-chip index, briefly fell
below 2,585, its 23.6 percent Fibonacci retracement level of a
fall to a low in May from a high in April.
The index, down 1.2 percent at 2,586.26 points after falling
as low as 2,576.35 earlier, could find support at 2,507 points,
its low in July. On the upside, it faces strong resistance at
around 2,670, a 38.2 percent retracement level.
Financial stocks also lost ground, with the STOXX Europe 600
banking index <.SX7P> falling 1.5 percent. Barclays <BARC.L>,
Royal Bank of Scotland <RBS.L>, Credit Agricole <CAGR.PA> and
Natixis <CNAT.PA> fell 1.4 percent to 3 percent.
But Credit Suisse upgraded European banks to "overweight"
from "benchmark". It also increased its "underweight" in capital
goods and trimmed its "overweight" in tech, media and food
producers.
"The direction of macro policy since the start of Q2 has
turned decidedly in favour of a combination of tight fiscal and
loose monetary policy, which we believe helps banks relative to
cyclicals," Credit Suisse said in a report.
Among individual movers, Carrefour <CARR.PA>, Europe's top
retailer, outperformed the market and was down just 0.1 percent
after confirming operating profit would rise this year.
[]
Raiffeisen International <RIBH.VI> fell 1.8 percent after it
missed second-quarter expectations with net profit of 71 million
euros ($90 million), hurt by rising administrative expenses even
as charges for bad debt fell. []
Across Europe, Britain's FTSE 100 <>, Germany's DAX
<> and France's CAC 40 <> fell 1.0-1.2 percent.
(Editing by Dan Lalor)
