European shares fall most in 10 weeks

* FTSEurofirst 300 index falls 1.9 pct

* Banco Santander leads banks lower

* Glaxo outperforms after results

* Tech stocks suffer from SAP; Telcos up on BarCap note

By Brian Gorman

LONDON, Oct 28 (Reuters) - European shares hit a three-week closing low on Wednesday, hurt by disappointing earnings from Spain's Banco Santander (SAN.MC) and Germany's SAP (SAPG.DE) and by U.S. new home sales unexpectedly falling in September.

The FTSEurofirst 300 .FTEU3 index of top European shares fell 1.9 percent to 980.23 points, its biggest one-day decline since Aug. 17 and its lowest close since Oct. 5. The European benchmark is still up nearly 52 percent from its lifetime low of March 9.

Banks were among those taking most points off the index. Banco Santander (SAN.MC), the euro zone's biggest bank by market value, fell 3.4 percent after it posted a 2.8 percent fall in nine-month net profit. [ID:nLS477783]

BNP Paribas (BNPP.PA), HSBC (HSBA.L) and UBS (UBSN.VX) fell between 1.4 and 3.8 percent.

Ireland's two main banks Allied Irish Banks (ALBK.I) and Bank of Ireland (BKIR.I) plunged 16.6 and 25 percent respectively on uncertainty over Dublin's bank rescue measures. [ID:nLS660223]

"People have put a bit more money back into the defensives, the cheaper end of the market," said Philip Lawlor, chief portfolio strategist at Nomura, in London.

"There isn't going to be any double-dip. The market just got a bit ahead of itself. Valuations went from looking relatively cheap to looking relatively expensive."

SAP closed 7.7 percent lower, after the company cut its sales outlook on weakness in emerging markets and in Japan, leaving investors wondering where buyers for its high-end software will emerge from a client base still keeping costs in check. [ID:nLR57363]

Telecom gear maker Alcatel-Lucent (ALUA.PA), which reports results on Friday, fell 6.4 percent.

Across Europe, the FTSE 100 .FTSE index, Germany's DAX .GDAXI and France's CAC 40 .FCHI were down between 1.4 and 1.8 percent.