European shares fall as bond market sell-off rattles investors

* Pan-European FTSEurofirst 300 index down 1.6 pct

* Global bond sell-off puts pressure on the market

* Numericable-SFR up after raising profitability target

LONDON, May 12 (Reuters) - European shares fell sharply in morning trading on Tuesday as a sell-off in global bond markets led investors to trim their risk exposure.

The pan-European FTSEurofirst 300 index was down 1.6 percent at 1,570.88 points by 0836 GMT and Germany’s DAX fell 1.8 percent, with investors trimming their trading equity positions following a sharp rise in bond yields.

“It’s a matter of concern for the market,” Ian Richards, global head of equities strategy at Exane BNP Paribas, said.

“When any particular asset class goes through periods of extreme volatility in a short space of time, people feel the pressure to take their risk exposure lower. Of course, there is an overlap from what may be a bond market event into the equity space.”

German Bund yields rose as a global sell-off in bond markets resumed. The sell-off has puzzled investors and analysts since the end of April. Traders have blamed it on a rise in inflation expectations, higher oil prices, and restricted liquidity, but the full picture is far from clear.

“Should the weakness in bonds and emerging market currencies continue to intensify in the days ahead, it will be just a matter of time till major stock markets around the world will come under additional pressure also,” said Markus Huber, senior analyst at Peregrine & Black.

Greece’s ATG index, up 0.7 percent, outperformed the wider European stock market. Greece calmed fears of a default on Monday by making a 750 million euro payment to the International Monetary Fund a day early, although Finance Minister Yanis Varoufakis said the liquidity situation was “terribly urgent”.

The market also came under pressure following an 8 percent fall in easyJet after the British low cost airline warned it would take a hit from air traffic strikes in April.

Among other sharp movers, French telecom group Numericable-SFR gained 5.8 percent, after raising its medium-term profitability target and promised more cost savings than originally planned from its merger.

Numericable bought mobile operator SFR from Vivendi last November. Aggressive cost-cutting efforts by SFR’s new owner and its parent company, Altice, paid off in higher operating profit. Altice shares rose 7.8 percent.

German industrial group ThyssenKrupp rose 3.9 percent after saying it expects to achieve efficiency gains of more than 2.5 billion euros ($2.8 billion) by September 2015. (Editing by Raissa Kasolowsky)