European shares slip on weaker banks, commodities

* FTSEurofirst 300 falls 1.1 pct

* Oils, mining stocks slip, track weaker commodity prices

* U.S. consumer confidence, new homes data awaited

By Atul Prakash

LONDON, Aug 26 (Reuters) - European shares slipped on Tuesday as concerns about the global economic and financial sector outlook kept investors jumpy and business sentiment continued to slide.

At 0836 GMT, the FTSEurofirst 300 index of top European shares was down 1.1 percent at 1,156.43 points. The index lost 0.6 percent on Monday, when the UK stock market was closed for a holiday.

Tough market conditions were highlighted by a report showing German corporate sentiment fell by more than expected in August, dragged down by a sharp deterioration in companies' business expectations.

Weaker consumer spending led to a contraction of the German economy in the second quarter of this year for the first time since 2004 and household morale was poised to deteriorate further, data showed.

Banks were the heaviest-weighted losers on the FTSEurofirst 300, followed by energy and mining sectors that tracked weaker commodities prices.

Lloyds TSB shed more than 3 percent, Bank of Ireland fell 2.3 percent, Royal Bank of Scotland fell 2.3 percent and Standard Chartered declined 2.8 percent.

"There are too many banks and not enough business," said Justin Urquhart-Stewart, director at 7 Investment Management.

"More pain is also expected in the U.S. housing market with investors still waiting for the bottom," he added.

Investors await U.S. consumer confidence and new homes data later in the session for clearer market direction in the near term.

The FTSEurofirst 300 is down nearly 2 percent so far this month and is on track for its ninth month of losses in the last 10.

Across Europe, Britain's commodity-heavy FTSE 100 .FTSE was down 2 percent, Germany's DAX .GDAXI was down 0.4 percent and France's CAC .FCHI fell 1 percent.

MINERS TRACK METAL PRICES

Mining shares fell, tracking a retreat in Shanghai copper prices and other metals amid renewed concerns about Chinese demand and world economic growth.

Xstrata gave up 4.4 percent, Anglo American slipped 4.2 percent and Antofagasta dropped 3.8 percent.

The gloomy sentiment pulled Rio Tinto down more than 3 percent despite it posting better than expected results with underlying earnings up 55 percent.
Weaker crude oil prices, which fell sharply in the past sessions and traded below $115 a barrel, weighed on oil and energy shares.

BP , Royal Dutch Shell , Tullow Oil and BG Group fell between 2.3 and 3.5 percent.

Investors remained cautious in picking stocks, as the global economic outlook continued to be poor.

The International Monetary Fund has trimmed its world economic growth forecasts for this year and next, largely due to a marked worsening in its outlook for the euro zone, a G20 finance official told Reuters on Monday.

"Poor growth figures from the IMF is a another dose of realism for Europe. The Eurozone lags the U.S. and the UK and this is more evidence that there has been too much overspending and it is likely Merkel and Sarkozy will have to implement reform processes for things to start to improve," said Stewart.

Underlining difficult market conditions, data showed that German consumer sentiment deteriorated by more than expected heading into next month, hurt by concerns about the economic outlook and hitting a fresh 5-year low. (Additional reporting by Joanne Frearson; Editing by Quentin Bryar)