Europe shares down by midday; commods, banks weigh

* FTSEurofirst 300 index falls 1.1 pct

* Commodity shares down on weaker crude, metals prices

* Financial shares slip; HSBC falls 2.7 percent

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

By Atul Prakash

LONDON, May 11 (Reuters) - European equities slipped by midday on Monday as a sharp drop in crude oil and metals prices pressured commodity stocks, while investors sold financial shares to take advantage of recent hefty gains.

At 1111 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 1.1 percent at 856.43 points after falling as low as 852.19. The index closed 1.7 percent higher on Friday and is up about 32 percent since hitting a record low in early March.

Energy stocks were among top losers after crude CLc1 fell around 2 percent. BP (BP.L), Royal Dutch Shell (RDSb.L), BG Group (BG.L), Tullow Oil (TLW.L), Repsol (REP.MC) and Total (TOTF.PA) shed 0.3 percent to 3 percent.

Banks also lost ground despite an update from HSBC (HSBA.L), Europe's biggest bank, saying its first quarter profits were "well ahead" of last year. [ID:nLB716280]

HSBC fell 2.7 percent, while Standard Chartered (STAN.L) was down 3.5 percent, Royal Bank of Scotland (RBS.L) dropped 3.4 percent, Credit Agricole (CAGR.PA) fell 3 percent and Commerzbank (CBKG.DE) slipped 4.8 percent.

"There are some positive indicators that might lend support later in the year, but we were overdue a phase of consolidation. We had a very sharp rally from the recent lows," said Jonathan Lawlor, head of European research at Fox-Pitt, Kelton.

Mining shares were also under pressure as copper MCU3 and zinc MZN3 both fell around 3 percent, while aluminium MAL3 was down 1.4 percent.

"Mining is the day's big loser, with announcement of a rights issue by Lonmin weighing across the sector," Philip Gillet, trader at IG Index, said in a note.

"Joining Lonmin at the bottom of the board are Vedanta and Kazakhmys, with some investors worried the recovery in these stocks has been over extended."

Lonmin (LMI.L), the world's third biggest platinum producer, fell 10.6 percent after it unveiled a $457 million rights issue to pay off debt and bolster its balance sheet. [ID:nL81008436]

BHP Billiton (BLT.L), Anglo American (AAL.L), Antofagasta (ANTO.L), Rio Tinto (RIO.L), Xstrata STA.L, Vedanta (VED.L), Kazakhmys (KAZ.L) and Eurasian Natural Resources (ENRC.L) were down 1.6 percent to 11 percent.

FRENCH DATA

Investor sentiment was dampened after data showed French industrial output fell more sharply than expected in March as big drops in production of electronic goods, energy and food outweighed a rise in the transport equipment sector.

Across Europe, the FTSE 100 .FTSE index was down 0.7 percent, Germany's DAX .GDAXI fell 0.6 percent and France's CAC 40 .FCHI was down 1.4 percent.

French energy giant EDF (EDF.PA) agreed to sell a stake in nuclear operator British Energy to Centrica (CNA.L), striking a partnership with the gas group to build a new generation of nuclear power stations in the United Kingdom. EDF was down 4.4 percent.

Norwegian oil and gas company StatoilHydro (STL.OL) posted a smaller-than-expected drop in profits for the first quarter, helped by record output but hit by lower oil prices, and it stuck to its 2009 production target. But its shares were down 1 percent in line with broader market weakness.

AstraZeneca (AZN.L) jumped 6.3 percent on news its experimental heart drug Brilinta has beaten Sanofi-Aventis SA (SASY.PA) and Bristol-Myers Squibb Co's (BMY.N) blockbuster Plavix in a pivotal clinical trial. [ID:nLB630992] (Additional reporting by Christoph Steitz; Editing by Sharon Lindores)