Banks, commods drag European shares to 3-week low

                                
 * FTSEurofirst 300 index down 1.2 pct
                                
 * Banks fall; Banco Santander down
                                
 * Commods lower; BG Group slips
* Investors turn to defensive stocks
                                
 
                                
 By Joanne Frearson
                                
 LONDON, Oct 28 (Reuters) - European shares hit a three-week
low on Wednesday as earnings news from Banco Santander <SAN.MC>
and BG Group <BG.L> weighed, with banking and energy stocks the
biggest fallers.
                                
 By 0959 GMT, the pan-European FTSEurofirst 300 <.FTEU3>
index of top shares was down 1.2 percent at 987.58 points after
falling to 986.74, its lowest level since Oct 6.
The index, which has lost ground in four of the last five
sessions, is still up 19 percent so far this year and has jumped
53 percent since reaching a floor in early March.
                                
 "Given the huge rise it is not surprising to see a
correction," said Howard Wheeldon, strategist at BGC Partners.
                                
 Banks took the most points off the index. The eurozone's
biggest bank by market value, Santander <SAN.MC>, fell 3.1
percent after it posted a 2.8 percent fall in net profit.
[ID:nMDT008723]
                                
 Irish banks slumped as traders cited worries over "bad bank"
rescue timings. Bank of Ireland <BKIR.I> and Allied Irish Banks
<ALBK.I> fell 16.8 percent and 14.3 percent, respectively.
                                
 Barclays <BARC.L>, Societe Generale <SOGN.PA> and UniCredit
<CRDI.MI> were down 1.9 to 3.1 percent.
                                
 Energy shares featured among the worst performers. BG Group
<BG.L> was down 1.9 percent after it posted a 44 percent drop in
third-quarter net profits to 484 million pounds ($794.6 million)
as gas and oil prices plummeted, although its underlying profits
beat forecasts. [ID:nLS609784]
                                
 BP <BP.L>, Petroplus <PPHN.VX> and Total <TOTF.PA> lost 0.8
to 4.8 percent as crude <CLc1> slipped 0.5 percent.
                                
 
                                
 MINERS RETREAT
                                
 Miners were on the downside as copper <MCU3=LX> retreated
0.9 percent on demand concerns.
                                
 Anglo American <AAL.L>, Antofagasta <ANTO.L>, BHP Billiton
<BLT.L>, Eurasian Natural Resources Corporation <ENRC.L>, Rio
Tinto <RIO.L> and Xstrata <XTA.L> lost 1.2 to 3.4 percent.
                                
 ArcelorMittal <ISPA.AS>, the world's largest steelmaker,
fell 2.8 percent. The company forecast core profit in the fourth
quarter of $2.0 to $2.4 billion, below analysts' expectations. 
[ID:nLQ682729]
                                
 Software companies were also lower. Germany's SAP <SAPG.DE>
slumped 6.2 percent after it cut its outlook for software sales
and related services revenues for the full year after reporting
lower than expected quarterly results. [ID:nLR57363]
                                
 "Sales were disappointing on all levels. Regarding the
all-important licence sales, there was a clear shortfall of
expectations. Add to this the sales outlook cut," said Nicolas
Von Stackelberg, analyst at Oppenheim Research.
                                
 On the upside, investors turned to defensive stocks for
safety. Drugmakers Sanofi Aventis <SASY.PA>, Novartis <NOVN.VX>
and Roche <ROG.VX> were 0.4 to 0.8 percent higher, while
GlaxoSmithKline added 0.3 percent ahead of Q3 results due at
1200 GMT.
                                
 Later in the session, investors will eye U.S. Durable Goods
figures to be released at 1230 GMT and U.S. New Home Sales data
out at 1400 GMT.
                                
 Across Europe, the FTSE 100 <.FTSE> index, Germany's DAX
<.GDAXI> and France's CAC 40 <.FCHI> were all down 1.2 percent.
                                
(Reporting by Joanne Frearson, editing by John Stonestreet)