European shares down 1 pct, extend losing streak

* FTSEurofirst 300 down 1 pct, up 17.5 pct on March low

* Financials top losers, U.S. futures weaken

* Gains in utilities limit benchmark losses

* For up-to-the-minute market news, click on [STXNEWS/EU]

By Christoph Steitz

FRANKFURT, April 7 (Reuters) - European shares fell for a third consecutive session on Tuesday as financials weakened along with U.S. futures, reigniting fears over the global banking sector.

Figures that showed the euro zone economy shrank more than previously thought in the fourth quarter of 2008 also added to investor worry.

At 0927 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 1 percent at 758.72 points, after having been as high as 772.24 points. The index has risen 17.5 percent since hitting a lifetime low on March 9.

The DJ Stoxx Insurance Index .SXIP and the DJ Stoxx Banks Index .SX7P were the top sectoral losers, down 3.7 and 3.2 percent respectively.

UBS (UBSN.VX), Deutsche Bank (DBKGn.DE), BNP Paribas (BNPP.PA) and Barclays (BARC.L) were all down 4.1 to 5.5 percent.

"Financial stocks are subject to profit taking after the steep gains of the last weeks ... we do not see any positive input into the market from overseas," said Postbank equity strategist Heinz-Gerd Sonnenschein.

U.S. futures SPc2 NDc2, down 0.3-1.2 percent, pointed to a lower opening on Wall Street. The S&P500 broke a four-day winning streak on Monday after a prominent analyst revived worries over the health of banks.

Sonnenschein also said that investors were focused on earnings from aluminium maker Alcoa (AA.N), which kicks off the eagerly awaited earnings season in the United States.

UTILITIES, DEFENCE STOCKS GAIN

Shares in European defence stocks gained as the United States defence budget earmarked bigger funding for the F-35 joint strike fighter jet.

BAE Systems (BAES.L) rose 6.6 percent and EADS (EAD.PA) was up 0.6 percent.

"BAE is the big beneficiary -- it builds around 20 percent of the F-35," says Evolution analyst Nick Cunningham.

The DJ Stoxx Utilities .SX6P was the top sectoral gainer, up 0.9 percent, with E.ON (EONGn.DE), EDF (EDF.PA) and GDF Suez (GSZ.PA) all up 0.5 to 1.7 percent.

Food and beverage producers added most points to the index, with Heineken (HEIN.AS), Nestle (NESN.VX), Unilever (ULVR.L) and Danone (DANO.PA) up 0.9 to 1.8 percent.

Across Europe, Britain's FTSE 100 .FTSE was down 1.1 percent, Germany's DAX .GDAXI lost 1.1 percent and France's CAC-40 .FCHI was down 1.2 percent. (Additional reporting by John Bowker in London; Editing by Jon Loades-Carter)