LONDON, Sept 1 (Reuters) - European shares fell sharply in early trade on Monday, led by banks as Commerzbank (CBKG.DE: Quote, Profile, Research, Stock Buzz) tumbled more than 7 percent after agreeing a deal to buy Allianz's (ALVG.DE: Quote, Profile, Research, Stock Buzz) Dresdner Bank for $14.5 billion.
At 0715 GMT, the FTSEurofirst 300 index of top European shares was down 0.8 percent at 1,185.17 points, starting the month off on a weak note after notching up a gain of 1.2 percent in August, only its second monthly gain in 10 months.
Commerzbank was down 6 percent and Allianz was flat.
For Commerzbank, the acquisition looks "more expensive than expected," DZ Bank said in a note. "On a first glance we don't like the transaction at all," it said.
Heino Ruland, analyst at FrankfurtFinanz, said Commerzbank shareholders would "suffer for a number of years".
"On balance we would continue to be short Commerzbank and long Allianz," he said.
London Stock Exchange (LSE.L: Quote, Profile, Research, Stock Buzz) fell 3 percent after the Financial Times said the exchange operator would introduce deep fee cuts and incentives for traders.
(Reporting by Sitaraman Shankar and Peter Starck)
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