* FTSEurofirst 300 down 1.1 pct; falls for 3rd straight day
* Banks top losers, led by Santander, ING, Credit Suisse
* Defensives eke out gains as risk appetite diminishes
* For up-to-the-minute market news, click on []
By Blaise Robinson
PARIS, Sept 2 (Reuters) - European stocks fell in early
trade on Wednesday, losing ground for the third straight session
and mirroring sharp losses on Wall Street and in Asia, with
financial shares among the hardest hit.
At 0812 GMT, the FTSEurofirst 300 <> index of top
European shares was down 1.1 percent at 944.05 points. The
benchmark index, which shed 1.8 percent on Tuesday, is up 46
percent since reaching a floor in March.
The DJ STOXX European banking index <.SX7P> was down 2.1
percent on Wednesday, with Banco Santander <SAN.MC> down 3
percent, UniCredit <CRDI.MI> down 2 percent and Barclays
<BARC.L> down 2.8 percent.
Insurers also got hit, with Aegon <AEGN.AS> down 5.2
percent, Swiss Re <RUKN.VX> down 5.3 percent and ING <ING.AS>
down 5 percent.
U.S. stocks dropped 2 percent on Tuesday, dragged lower by
renewed worries over the health of U.S. financial institutions,
as well as concerns that the sharp stock market rally since
early March has got ahead of the global recovery.
"The rebound from March has been remarkable. Year-to-date
gains for most of the indexes are strong, although we are still
below pre-Lehman Brothers levels," said Valerie Plagnol, chief
strategist at CM-CIC Securities in Paris.
"But the glass is still half empty. Macro data has improved,
but we're in a pattern of destocking-restocking, and the outlook
for consumer spending is still grim."
DEFENSIVES INCH HIGHER
Stocks seen as defensives such as pharmas and telecoms eked
out gains as investors' risk appetite fell.
Sanofi-Aventis <SASY.PA> gained 1.5 percent, Vodafone
<VOD.L> rose 0.2 percent and GlaxoSmithKline <GSK.L> added 0.7
percent.
The VDAX-NEW volatility index <.V1XI>, a measure of investor
risk appetite or aversion, was up 2.9 percent, after a 5.5
percent rise in the previous session. The U.S. CBOE Volatility
Index <.VIX> jumped 12 percent on Tuesday, hitting its highest
level since early July.
"It shows how fragile sentiment can still be as the market
was awash with rumours about various U.S. institutions," said
Arifa Sheikh-Usmani, equity trader at Spreadex in London.
Resource-related shares felt the pinch from lower commodity
prices, with Rio Tinto <RIO.L> down 2 percent, Xstrata <XTA.L>
down 3 percent and Repsol <REP.MC> down 1.9 percent.
Around Europe, UK's FTSE 100 index <> was down 0.8
percent, Germany's DAX index <> down 1 percent, and
France's CAC 40 <> down 1 percent.
On the macro front, investors will keep an eye on U.S.
monthly ADP employment data, due at 1215 GMT, that could give
clues to the key U.S. payrolls figures expected on Friday.
(Reporting by Blaise Robinson; editing by John Stonestreet)
