* FTSEurofirst 300 down 0.3 pct, Euro STOXX 50 down 0.7 pct
* Spain's IBEX down 1.3 pct, Italy's MIB down 0.9 pct
* Investors sell banks, buy consumer-related multinationals
* Long-term market rally seen intact
PARIS, March 18 (Reuters) - European shares fell on Monday, slipping further from multi-year highs hit last week, as Cyprus's bailout plan involving a tax on bank deposits sparked fears of bank runs in the euro zone's most indebted countries.
Shares in southern European lenders were among the most hit, with Portugal's Banco Espirito Santo, Spain's Banco de Sabadell and Italy's UniCredit sinking 3.6-5.1 percent.
The FTSEurofirst 300 index of top European shares closed 0.3 percent lower, at 1,199.74 points, while the euro zone's blue chip Euro STOXX 50 index ended 0.7 percent lower at 2,705.47 points.
The FTSEurofirst 300 and the Euro STOXX 50 tumbled as much as 1.2 percent and 2.3 percent respectively in early trade, before trimming losses as some investors saw the dip as an opportunity to grab more shares in big European multinationals.
AB Inbev, the world's biggest brewer, gained 1.7 percent on the day, while cosmetics maker L'Oreal added 1.2 percent and clothing retailer Inditex rose 0.8 percent.
Under a plan that was unveiled at the weekend, Cyprus will impose a tax on bank deposits as part of a 10 billion euro bailout by the European Union. A parliamentary vote on the plan is due on Tuesday.
"I think this is just the coming out of what has been boiling underneath for some time, and the markets failed to appreciate because they were numb with the ECB anesthetics," said Nicola Marinelli, fund manager at Glendevon King Asset Management.
"This comes down to the one big problem that no politician is willing to accept as such, i.e. the currency union without full fiscal, political and cultural unions," he said.
European equities have strongly rallied since mid-2012 - with the Euro STOXX 50 surging about 30 percent - propelled by the European Central Bank's pledge to safeguard the euro, which eased fears of a break-up of the region's currency bloc and prompted investors to scoop up shares battered by the three-year sovereign debt crisis.
"Clearly, there is a lot of danger, but I wouldn't make too much of it further down the road," said Francois Savary, chief investment officer at Swiss bank Reyl, which manages around 8 billion Swiss francs in assets.
"Flows of funds (coming back) into equities have been huge. Is the Cyprus situation able to derail this? I don't think so."
Despite the day's pull-back, charts showed the European equity market rally was still intact.
The Euro STOXX 50 tested a key support level, its 50-day moving average, before bouncing back in late trade, sending a positive technical signal.