European shares down as banks, insurers weigh

* FTSEurofirst 300 falls 0.5 percent

* Banks, insurers slip on financial market troubles

* Energy, mining stocks gain on higher commodity prices

By Atul Prakash

LONDON, Aug 27 (Reuters) - European shares fell early on Wednesday as a decline in financial stocks on persistent worries about the health of the sector negated the impact of a rise in oil and mining shares that gained on higher commodity prices.

At 0834 GMT, the FTSEurofirst 300 index of top European shares was down 0.5 percent at 1,165.80 points. The index gained 0.2 percent in the previous session.

Banks were the top weighted sectoral loser on the index, as investors remained jittery about the sector, which has been worst hit by a credit crisis stemming from a collapse in risky U.S. mortgages.

A report from the Federal Deposit Insurance Corporation said on Tuesday that 117 U.S. banks were on its troubled banks list at the end of the second quarter, up from 90 after the first three months of the year.

"It's a difficult environment for the banking sector," said Henk Potts, equity strategist at Barclays Stockbrokers.

"Financials have been under pressure due to concerns about the speed of the economic slowdown and worries that there is still further fallout from the subprime credit crunch issues."

Natixis slipped more than 5 percent, Sweden's Swedbank shed 3.6 percent, Italian bank UBI Banca fell nearly 3 percent and UBS AG declined 2.4 percent.

Insurers were also under pressure, with Swiss Life falling 2.5 percent, Aegon dropping 1.9 percent, Old Mutual shedding 1.6 percent and Prudential falling 1.5 percent.

Swiss insurer Baloise fell 5.6 percent after it posted a worse-than-expected 42 percent drop in first-half net profit due to losses on investments and said it expected financial markets to remain volatile this year.

Across Europe, Britain's FTSE 100 .FTSE fell 0.18 percent, Germany's DAX .GDAXI was down 0.73 percent and France's CAC 40 .FCHI eased 0.67 percent.

OILS TRACK CRUDE PRICES

But oil and energy stocks gained, tracking a rise in crude prices that rose for a third straight session to near $117 a barrel on growing fears over Tropical Storm Gustav, heading towards oil and natural gas installations in the Gulf of Mexico.

Tullow Oil , BP , BG Group and Total rose between 0.2 and 1.5 percent.

Miners also rose with an increase in metal prices. Vedanta was up 1.3 percent, Anglo American added 0.8 percent and BHP Billiton was up 0.4 percent.

London-listed Chilean miner Antofagasta rose 1.3 percent after posting an 8.8 percent rise in first-half earnings per share as higher copper output and prices outweighed rising costs.

Among individual shares, Dutch brewer Heineken NV rose 2.3 percent after it posted first-half operating profit up 7.4 percent to 925 million euros ($1.36 billion), missing forecasts, but it said it had achieved higher pricing in most markets and cut costs.

But world number two truck maker Volvo fell 2.6 percent. It said deliveries of its trucks rose 2 percent year-on-year in July as strength in Asia offset weakness on both sides of the Atlantic.

Investors awaited U.S. durable goods data, due at 1230 GMT, for near-term market direction. (Editing by David Cowell)