European shares down 1 pct, extend losing streak

                                
 * FTSEurofirst 300 down 1 pct, up 17.5 pct on March low
                                
 * Financials top losers, U.S. futures weaken
                                
 * Gains in utilities limit benchmark losses
                                
 * For up-to-the-minute market news, click on [STXNEWS/EU]
                                
 
                                
 By Christoph Steitz
                                
 FRANKFURT, April 7 (Reuters) - European shares fell for a
third consecutive session on Tuesday as financials weakened
along with U.S. futures, reigniting fears over the global
banking sector.
                                
 Figures that showed the euro zone economy shrank more than
previously thought in the fourth quarter of 2008 also added to
investor worry.
                                
 At 0927 GMT, the FTSEurofirst 300 <.FTEU3> index of top
European shares was down 1 percent at 758.72 points, after
having been as high as 772.24 points. The index has risen 17.5
percent since hitting a lifetime low on March 9.
                                
 The DJ Stoxx Insurance Index <.SXIP> and the DJ Stoxx Banks
Index <.SX7P> were the top sectoral losers, down 3.7 and 3.2
percent respectively.
                                
 UBS <UBSN.VX>, Deutsche Bank <DBKGn.DE>, BNP Paribas
<BNPP.PA> and Barclays <BARC.L> were all down 4.1 to 5.5
percent.
                                
 "Financial stocks are subject to profit taking after the
steep gains of the last weeks ... we do not see any positive
input into the market from overseas," said Postbank equity
strategist Heinz-Gerd Sonnenschein.
                                
 U.S. futures <SPc2> <NDc2>, down 0.3-1.2 percent, pointed to
a lower opening on Wall Street. The S&P500 broke a four-day
winning streak on Monday after a prominent analyst revived
worries over the health of banks.
                                
 Sonnenschein also said that investors were focused on
earnings from aluminium maker Alcoa <AA.N>, which kicks off the
eagerly awaited earnings season in the United States.
                                
 
                                
 UTILITIES, DEFENCE STOCKS GAIN
                                
 Shares in European defence stocks gained as the United
States defence budget earmarked bigger funding for the F-35
joint strike fighter jet.
                                
 BAE Systems <BAES.L> rose 6.6 percent and EADS <EAD.PA> was
up 0.6 percent.
                                
 "BAE is the big beneficiary -- it builds around 20 percent
of the F-35," says Evolution analyst Nick Cunningham.
                                
 The DJ Stoxx Utilities <.SX6P> was the top sectoral gainer,
up 0.9 percent, with E.ON <EONGn.DE>, EDF <EDF.PA> and GDF Suez
<GSZ.PA> all up 0.5 to 1.7 percent.
                                
 Food and beverage producers added most points to the index,
with Heineken <HEIN.AS>, Nestle <NESN.VX>, Unilever <ULVR.L> and
Danone <DANO.PA> up 0.9 to 1.8 percent.
                                
 Across Europe, Britain's FTSE 100 <.FTSE> was down 1.1
percent, Germany's DAX <.GDAXI> lost 1.1 percent and France's
CAC-40 <.FCHI> was down 1.2 percent.
 (Additional reporting by John Bowker in London; Editing by Jon
Loades-Carter)