UPDATE 1-German banks cap European shares on balance sheet woes
* FTSEurofirst 300 down 0.1 pct, Euro STOXX 50 up 0.2 pct
* Deutsche Bank down 3.1 pct, warns tapering fears curb revenues
* Commerzbank falls on asset disposal doubts
* Santander boosted in late trade by cost saving expectations
By Francesco Canepa
LONDON, Sept 25 (Reuters) - European shares ended little changed on Wednesday as selloffs in German lenders Deutsche Bank and Commerzbank, hit by concerns about their balance sheets, were offset by a bounce in Spanish peers Santander and BBVA.
Shares in Deutsche Bank fell 2.6 percent as the bank, which has embarked on a deleveraging plan to shed 250 billion euros ($337.69 billion) in assets, warned of lower investment banking revenue this quarter.
The bank blamed the fall in revenue on expectations the U.S. Federal Reserve would begin to cut its bond purchases sapping activity in the fixed income market.
"Most of the deleveraging is coming out of the fixed income business," Piers Brown, an analyst at Macquarie Securities, said. "People feel that there's a bit more pressure on Deutsche going forward from the deleveraging plan."
Volume on Deutsche Bank's shares was 73 percent higher than its average for the past three months.
Smaller competitor Commerzbank, which is trying to reduce its 347 billion euros ($468.19 billion) book of non-core assets, fell 6 percent in volume twice the average after telling analysts no major divestment was on the cards until year-end.
They were among the top fallers on the FTSEurofirst 300 index of top European shares, which ended 0.1 percent lower at 1,256.93 points. The euro zone's blue-chip Euro STOXX 50 index edged 0.2 percent higher to 2,927.35 points.
The indexes recovered ground in late trade, led by Spanish bank Santander, which rose 1.4 percent after saying it aims for an extra 1 billion euros ($1.35 billion) in cost savings by 2016.
Peer BBVA rose 1.3 percent, helping Spain's Ibex index climb 0.8 percent, the best performer among major national indexes in Europe.
The FTSEurofirst 300 has slipped about 1.4 percent since hitting a five-year high last week but it was still on track for a 5.1 percent monthly gain, its best showing since October 2011.
The market has been fretting about next month's negotiations in Washington to raise the federal debt ceiling to prevent a default, as well as the outlook for the Federal Reserve's stimulus measures after the Fed decided not to scale back the measures last week.
"Investors are still confused about the Fed's monetary policy, and now the focus is switching to negotiations between Democrats and Republicans in Washington. After such a rally, people are now very cautious," said Guillaume Dumans, co-head of research firm 2Bremans.