* FTSEurofirst 300 down 0.8 pct
* Commerzbank falls 7 pct on deal to buy Dresdner
* Miners track lower copper prices; oil eyes U.S. hurricane
Gustav
By Sitaraman Shankar
LONDON, Sept 1 (Reuters) - European share prices fell
sharply in early trade on Monday, led by banks as Commerzbank
<CBKG.DE> tumbled more than 7 percent after agreeing a deal to
buy Allianz's <ALVG.DE> Dresdner Bank for $14.5 billion.
At 0831 GMT the FTSEurofirst 300 index of top European
shares <> was down 0.8 percent at 1,185.49 points,
starting the month off on a weak note after notching up a gain
of 1.2 percent in August, only its second positive month in 10.
Banks took most points off the index as investors gave the
thumbs down to Commerzbank's long-awaited buy of Dresdner,
saying that it was too costly.
Commerzbank was down 6 percent and Allianz was down 0.2
percent. UBS <UBSN.VX> lost 1 percent, Credit Suisse <CSGN.VX>
fell 0.4 percent and Deutsche Bank <DBKGn.DE> lost 0.7 percent.
Analysts said that at least the deal showed that it was
possible to push through large transactions after a year-long
credit crisis.
"It looks a bit pricey," said Franz Wenzel, strategist at
AXA Investment Managers in Paris.
"But it clears the skies for the German banking system, and
shows there is no systemic risk."
"On a first glance we don't like the transaction at all,"
said DZ Bank, and Heino Ruland, analyst at FrankfurtFinanz, said
Commerzbank shareholders would "suffer for a number of years".
Japan's Nikkei index <> fell 1.8 percent as techs and
exporters fell, and U.S. stocks slid on Friday as comments from
computer maker Dell <DELL.O> sparked fears about weakness in the
technology sector.
"Clearly Asia is withdrawing from stability and there are
some headwinds from earnings disappointments. In Europe too we
have concerns that IT spending might be hit by the global
economy ... we seem to be in for a lacklustre week," said
Wenzel.
Another factor weighing on stocks was hurricane Gustav,
which was heading towards the Louisiana coast in the United
States and forced oil companies to shut down nearly all
production in the energy-rich Gulf of Mexico.
Oil gained $1.60 to just over $117 a barrel but shares in BP
<BP.L>, Shell <RDSa.L> and Total <TOTF.PA> fell 0.2-0.5 percent.
Across Europe, Britain's FTSE <> was down 0.9 percent,
Germany's DAX <> down 1 percent and France's CAC <>
down 0.8 percent.
U.S. markets are closed for the Labor Day holiday.
LSE, MINERS HIT
London Stock Exchange <LSE.L> fell 3 percent after the
Financial Times said the exchange operator would introduce deep
fee cuts and incentives for traders.
Miners fell, tracking a sharp fall in copper futures
<MCU3=LX>. Xstrata <XTA.L>, Vedanta <VED.L>, Anglo American
<AAL.L>, Rio Tinto <RIO.L> and Kazakhmys <KAZ.L> fell 1.2-2.6
percent.
French tyremaker Michelin <MICP.PA> was a standout gainer,
rising 3.9 percent, with traders citing a Merrill Lynch upgrade.
The FTSEurofirst 300 has fallen 21 percent so far this year,
hit by big losses at banks due to the credit crisis and by a
slowing in the economy.
Oil prices are well off their record above $147 a barrel in
July, and though they have since come off sharply, analysts say
this is not going to be enough to boost third-quarter earnings.
"We've had a minor rally due to the oil decline, but oil's
back to April/May levels and that's not really a stabilising
factor for trend growth," said AXA's Wenzel.
(Additional reporting by Peter Starck in Frankfurt; Editing by
Greg Mahlich)
