U.S. data drags European shares to five-week low

                                
 * FTSEurofirst 300 index ends 0.8 percent lower
                                
 * U.S. new home sales, durable goods data knocks stocks
                                
 * Allied Irish Banks slips after Ireland downgrade
                                
 
                                
 By Joanne Frearson
                                
 LONDON, Aug 25 (Reuters) - European shares hit a five-week
closing low on Wednesday after lower-than-expected U.S. durable
goods orders and weak U.S. new home sales data sparked worries
over the prospects of a global economic recovery.
                                
 Investor sentiment had earlier been knocked after Standard &
Poor's late on Tuesday cut its ratings on Ireland and assigned
the country a negative outlook, with Allied Irish Banks <ALBK.I>
down 2.9 percent.
                                
 The pan-European FTSEurofirst 300 <.FTEU3> index of top
shares closed 0.8 percent lower at 1,011.35 points after being
as low as 1,001.83.
                                
 "Europe is falling on the back of disappointing data out of
the U.S., investors are keeping their hands dry and staying out
of the game, the sentiment is pretty bad." said Will Hedden,
sales trader at IG Index.
                                
 Weaker-than-expected July orders for long-lasting U.S.
manufactured goods suggested a slowdown in manufacturing and new
U.S. single-family home sales unexpectedly fell in July to their
slowest pace on record.
                                
 Elsewhere, Tullow Oil <TLW.L> dropped 4.6 percent after it
said the development of its Ugandan oil fields would be delayed
due to a spat between the government and the oil explorer's
former partner.
                                
 Miners featured among the biggest fallers. BHP Billiton
<BLT.L> fell 2 percent after it said it was cautious on the
short-term outlook and that the economy in China, its biggest
customer, would slow from recent highs.
                                
 Other miners Anglo American <AAL.L>, Antofagasta <ANTO.L>,
Rio Tinto <RIO.L> and Xstrata <XTA.L> slipped by between 1.4 and
3.4 percent.
                                
 
                                
 SUPPORT LEVEL
                                
 The Euro STOXX 50 <.STOXX50E>, the euro zone's blue chip
index, was down 1 percent at 2,587.4 points, just above a key
support level, the 23.6 percent retracement of the index's fall
from a high in April to a low in May after piercing it earlier
in the session.
                                
 "The Ireland downgrade was not too much of a surprise but it
is still weighing on sentiment. The theme so far has been one of
better company earnings, but that has been weighed down by
uncertainty over the economy," said Joshua Raymond, market
strategist at City Index.
                                
 "There is a big focus on economic data now that we've come
through the earnings season. People are expecting very slow
growth at the minimum but there is still a potential for a
double dip and investors are looking towards economic data to
help paint the picture for the potential for that."
                                
 Among individual stocks, Aggreko <AGGK.L> fell 5.8 percent,
reversing gains from earlier in the session, as expected
upgrades to full-year forecasts failed to materialise following
first-half results.
                                
 However, positive earnings results did limit the
FTSEurofirst index from further falls. Serco <SRP.L> rose 4.8
percent after the British outsourcing firm posted a 21 percent
increase in half-year pretax profit.
                                
 Across Europe, the FTSE 100 <.FTSE> index was down 0.9
percent, Germany's DAX <.GDAXI> fell 0.6 percent and France's
CAC 40 <.FCHI> was 1.2 percent lower.
 (Editing by David Holmes)