* FTSEurofirst 300 closes down 0.4 pct at 1,220.84 points
* Euro STOXX 50 ends down 0.7 pct at 2,790.78 points
* HSBC and Munich Re take most points off FTSEurofirst
* Expect more near-term volatility -Schroders fund manager
* Other investors reassured by improving economic data
LONDON, Aug 6 European shares fell on Tuesday, hit by declines in financial heavyweights HSBC and Munich Re, and some traders predicted more weakness as investors look to book profits on last month's rally.
The pan-European FTSEurofirst 300 index closed down 0.4 percent at 1,220.84 points, breaking a six-day winning streak. The euro zone's blue-chip Euro STOXX 50 index fell 0.7 percent to 2,790.78 points.
Volumes were thin, with turnover on the FTSEurofirst 300 coming in at 90 percent of its 90-day average.
Sellers targeted British bank HSBC for a second consecutive day after several brokers cut their ratings and price targets on the stock following disappointing interim results on Monday.
HSBC - one of Europe's biggest stocks by market capitalisation - slipped 0.8 percent, adding to a 4.4 percent drop on Monday in reaction to the results.
Reinsurer Munich Re tumbled 5.4 percent after its second-quarter net profit fell more than forecast, and Munich Re and HSBC combined took the most points off the FTSEurofirst 300 index.
Logic Investments' strategy head Peter Rice said many investors were selling to book profits on a month-long rally that saw the FTSEurofirst 300 rise 10 percent from a 2013 low of 1,111.11 points reached in late June.
"I think we will see a bit more profit taking coming in future sessions. We've had a good run up and investors are looking to take money off the table," he said.
Other investors were more positive, arguing European equities would rise as the European economy continues to show signs of emerging from the euro zone's sovereign debt crisis.
The FTSEurofirst 300 is up 8 percent since the start of 2013 and data on Tuesday showed German industry orders far exceeded forecasts in June, while Italy's economy shrank less than expected in the second quarter.
"I am encouraged by what's going on in Europe. The leading indicators are starting to pick up. We should be out of recession in the second half of this year," said Kevin Lilley, European equity fund manager at Old Mutual Global Investors.
"I am considering going further 'underweight' on defensives and more 'overweight' on cyclicals," he added.
However, Schroders fund manager and global head of macro Bob Jolly was more cautious, arguing financial markets would be volatile as investors prepare for an eventual scaling back in stimulus measures from the U.S. Federal Reserve.
"We expect market volatility to remain high in the coming months and have moved to a more cautious stance," said Jolly.