* FTSEurofirst 300 slips from 11-mth highs; down 0.4 pct
* Banks fall, but sector index up 170 pct from March lows
* Energy, mining shares fall; weaker commods put pressure
* For up-to-the-minute market news, click on []
By Atul Prakash
LONDON, Sept 18 (Reuters) - European shares fell on Friday
from an 11-month peak scaled in the previous session, with banks
slipping after British regulators set tougher-than-expected
terms on Lloyds' <LLOY.L> exit from a government scheme.
At 0908 GMT, the FTSEurofirst 300 <> index of top
European shares was 0.4 percent lower at 1,006.97 points. On
Thursday, it closed higher for the ninth session in 10 on
mounting hopes the global economy was on a recovery path.
The index is up 21 percent this year and has jumped 56
percent since hitting a record low in early March. It has gained
18 percent this quarter and is on track to post the index's
strongest quarterly performance in almost a decade.
"As we enter the last trading session of the week, we see
markets taking a breather following the recent gains. Whilst it
is almost inevitable that there will be a pullback on some days,
it is the strength of the dips that will be in focus," said John
Murphy, analyst at ODL Securities.
"If we truly are in a bull run, investors will buy the dips.
If confidence is fragile, any dip could be perceived as the
start of the slump. Markets tend to overreact on both the long
and short side, so today could be a barometer for... confidence."
Banks <.SX7P>, which have surged more than 170 percent since
March lows, were among top losers.
Britain's Lloyds Banking Group <LLOY.L> was down 0.6 percent
in line with the broader market trend. The bank said it was in
talks over scaling back its participation in a state-backed
scheme to insure it against credit losses, and was also weighing
up alternatives to the scheme. []
The news sent sterling to a four-month low against the euro,
as a source told Reuters on Thursday that the Financial Services
Authority had set tougher-than-expected captial conditions on
Lloyd's potential exit from APS, making its departure less
likely. []
Standard Chartered <STAN.L>, Barclays <BARC.L>, Royal Bank
of Scotland <RBS.L>, BNP Paribas <BNPP.PA> and Societe Generale
<SOGN.PA> fell 0.5-1.7 percent.
Across Europe, Britain's FTSE 100 index <>, Germany's
DAX <> and France's CAC 40 <> fell 0.1-0.4 percent.
ENERGY SHARES LOSE POWER
Energy shares tracked oil prices <CLc1>, which fell 1
percent to trade below $72 a barrel after surging this week. BP
<BP.L>, BG Group <BG.L>, Tullow Oil <TLW.L>, Repsol <REP.MC>,
Total <TOTF.PA> and StatoilHydro <STL.OL> shed 0.5-2.7 percent.
Miners lost ground after key base metals prices slipped.
Copper fell on rising stocks and waning import demand from
China. BHP Billiton <BLT.L>, Anglo American <AAL.L>, Antofagasta
<ANTO.L>, Rio Tinto <RIO.L>, Xstrata <XTA.L> and Eurasian
Natural Resources <ENRC.L> fell 0.6-2.8 percent.
Volkswagen <VOWG.DE> fell 1.6 percent. The automaker is
planning to integrate its three different brands for light and
heavy commercial vehicles under one roof, the group's head of
sales and marketing said late on Thursday. []
On the positive side, home improvements retailer Kingfisher
<KGF.L> climbed 2.6 percent after the firm's strong first-half
results a day earlier prompted a round of price target hikes by
brokers.
Drugmakers, seen as defensive stocks, were also in demand.
AstraZeneca <AZN.L>, GlaxoSmithKline <GSK.L>, Merck <MRCG.DE>,
Novartis <NOVN.VX>, Roche Holding <ROG.VX>, Sanofi-Aventis
<SASY.PA> and Shire <SHP.L> rose between 0.6 and 1.9 percent.
In industry news, American Airlines will team up with
British Airways <BAY.L> and Qantas Airways <QAN.AX> to expand
their alliance with cash-strapped Japan Airlines <9205.T>, two
people with direct knowledge of the talks said, to beat off a
rival offer from another airline. []
British Airways shares were down 2.1 percent.
(Editing by Lin Noueihed)
