Banks, commodities lead European shares lower
LONDON, Aug 26 (Reuters) - European shares fell early on Tuesday to extend the previous session's losses as persistent concerns about global economic health and the financial sector weighed on the market.
At 0727 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.7 percent at 1,160.73 points. The index lost 0.6 percent on Monday, when the UK stock market was closed for a holiday.
Banks were the biggest sectoral losers, followed by energy and miners.
Royal Bank of Scotland (RBS.L) fell 1.5 percent and Standard Chartered (STAN.L) fell 2.3 percent.
BP (BP.L), Royal Dutch Shell (RDSa.L) and BG Group (BG.L) took the most points off the index, falling 1.8-2.6 percent. Anglo American (AAL.L), Rio Tinto (RIO.L), Xstrata (XTA.L) and BHP Billiton (BLT.L) fell by between 2 and 3 percent, hurt by weaker metal prices.
"There is little to give the market much comfort. Banks have a low level of trust between each other and are unwilling to lend to each other," said Justin Urquhart-Stewart, director at 7 Investment Management.
The International Monetary Fund has trimmed its world economic growth forecasts for this year and next, largely due to a marked worsening in its outlook for the euro zone, a G20 finance official told Reuters on Monday.
Underlining global economic gloom, data showed that German gross domestic product had contracted in the second quarter of this year for the first time since 2004, cut back by weaker private consumption and capital investment, official data showed.
Separately, the GfK market research group said German consumer sentiment deteriorated by more than expected heading into next month, hurt by concerns about the economic outlook and hitting a fresh 5-year low.
"Poor growth figures from the IMF is a another dose of realism for Europe. The Eurozone lags the U.S. and the U.K and this is more evidence that there has been too much overspending and it is likely Merkel and Sarkozy will have to implement reform processes for things to start to improve," said Stewart.
Commerzbank (CBKG.DE) declined 1.1 percent and Dresdner's owner Allianz (ALVG.DE) rose 0.2 percent after business daily Handelsblatt reported, citing financial sources, that Allianz's supervisory board will meet on Sunday to decide on the sale of Dresdner, and Commerzbank's supervisory board is also due to hold an extraordinary meeting at the weekend.
Investors awaited U.S. consumer confidence and new homes data later in the session for clearer market direction in the near term. (Reporting by Atul Prakash and Joanne Frearson)
