Banks, commods drag European shares to lower close

                                
 * FTSEurofirst 300 falls 1.8 pct; lowest close since Aug. 20
                                
 * Banks among top losers; commods track weaker crude, metals
                                
 * Eiffage falls more than 9 pct; Vivendi up 1 pct 
                                
 By Atul Prakash
                                
 LONDON, Sept 1 (Reuters) - European shares posted their
biggest one-day percentage fall in two weeks on Tuesday, led by
banks and commodity stocks, but analysts said the market was
likely to resume its climb after a period of consolidation.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
ended 1.8 percent down at 954.15 points, the lowest closing
level since Aug. 20. The index is up 15 percent this year and
has jumped 48 percent from a record low in March.
                                
 Financial stocks took the most points off the index, with
HSBC <HSBA.L>, Lloyds <LLOY.L>, Royal Bank of Scotland <RBS.L>,
BNP Paribas <BNPP.PA>, Societe Generale <SOGN.PA> and UBS
<UBSN.VX> falling 3.7-5.8 percent.
                                
 But Commerzbank <CBKG.DE>, rose 3.6 percent after its chief
executive Martin Blessing said in a newspaper interview that
Germany's second-biggest bank could return to profit as soon as
next year. [ID:nL1530707]
                                
 Analysts said the market slipped on profit-taking after
paring losses in the afternoon session on data showing the U.S.
manufacturing sector grew in August for the first time in over a
year and a half, while pending home sales surged to a two-year
high in July. [ID:nN01376541]
                                
 "It's surprising that the market didn't go higher despite
the good news. That's an indication that there is some kind of
fatigue starting to creep into investors' minds," said Franz
Wenzel, strategist at AXA Investment Managers, in Paris.
                                
 "The market is somewhat overbought. We wouldn't be surprised
to see the market consolidating in the near term, but that
should give some breath for the reminder of the year to climb
higher," he added.
                                
 Figures also showed that euro zone manufacturing activity
shrank less than previously thought in August, but there were
stark differences amongst the bloc's countries with contraction
accelerating in Spain and Italy. [ID:nL1611361]
                                
 Investors remained worried about the strength of an economic
recovery after a surprise drop in British manufacturing activity
last month and a sharp fall in consumer lending in July.
[ID:nL1662667]
                                
 "Today's numbers have shown that there could still be a few
bumps left along the way for the UK economy, but as far as stock
markets are concerned, the mood for shares is still positive,"
said David Jones, chief market strategist at IG Index.
                                
 "We have seen a couple of days of weakness around the world,
but for now there still seem to be enough buyers happy to step
in and provide support. It looks premature to start worrying
about a bigger correction."
                                
 
                                
 DEFENSIVES MAY GAIN 
                                
 Analysts said that cyclical stocks such as financials might
suffer going forward, but defensive shares might be in demand.
                                
 "The strong rebound in cyclicals, which are now at
relatively high valuation, will lose steam and stocks seen as
more defensive, which have been shunned by investors this year,
will take the lead," said Francois Chevallier, strategist at
Banque Leonardo.
                                
 Stocks in the FTSEurofirst 300 index now trade at 13.11
times expected earnings, according to Reuters data -- a level
not seen since July 2007, just before fears over banks' balance
sheets started to derail the market's 4-1/2-year bull run.
                                
 Energy stocks lost ground after crude oil <CLc1> prices fell
nearly 2 percent. BP <BP.L>, Royal Dutch Shell <RDSa.L>, BG
Group <BG.L>, Tullow Oil <TLW.L>, Repsol <REP.MC>, Total
<TOTF.PA> and StatoilHydro <STL.OL> were down 0.8-3.1 percent.
                                
 Miners were also lower. BHP Billiton <BLT.L>, Anglo American
<AAL.L>, Antofagasta <ANTO.L>, Rio Tinto <RIO.L>, Xstrata
<XTA.L> and ENRC <ENRC.L> fell 2.6-4.9 percent.
                                
 Vivendi <VIV.PA>, Europe's largest entertainment group, rose
1.1 percent after it delivered forecast-beating second-quarter
profits and ruled out reviving talks with Kuwaiti telecoms firm
Zain <ZAIN.KW>. [ID:nL1128850]
                                
 Eiffage <FOUG.PA> fell 9.3 percent after the French public
works group posted a sharp drop in earnings and cut its revenue
outlook for 2009.
                                
 Around Europe, UK's FTSE 100 index <.FTSE>, Germany's DAX
<.GDAXI> and France's CAC 40 <.FCHI> fell 1.8-2.5 percent.
                                
 "Maybe the market is just a bit uncomfortable at having
progressed non-stop against a background of incredibly good
newsflow," said Mike Lenhoff, strategist at Brewin Dolphin.
                                
(Additional reporting by Blaise Robinson in Paris; editing by
John Stonestreet)