European shares hit a three-week low on Wednesday as banks came under pressure following results from Banco Santander (SAN.MC), while earnings by BG Group (BG.L) weighed on energy stocks.

By 1200 GMT, the pan-European FTSEurofirst 300 .FTEU3 index of top shares was down 1.5 percent at 985.00 points after falling to 980.79, its lowest level since Oct 6. The index, which has lost ground in four of the last five sessions, is still up 18 percent so far this year and has jumped 52 percent since reaching a floor in early March.

The market has taken off its rose-coloured glasses, said Heinz-Gerd Sonnenschein, equity strategist at Postbank.

But I'm cautious about attributing the pressure among Europe's banks solely on Santander -- it may also just be a resuming trend.

Banks took the most points off the index, while the DJ STOXX European Banks Index .SX7P was 2.7 percent lower.

The eurozone's biggest bank by market value, Banco Santander, fell 3.6 percent after it posted a 2.8 percent fall in nine-month net profit. 

Barclays (BARC.L), Societe Generale (SOGN.PA) and UniCredit (CRDI.MI) were down 2.9 to 3.7 percent.

Shares in Ireland's two main banks Allied Irish Banks (ALBK.I) and Bank of Ireland (BKIR.I) plunged 15 percent and 16 percent respectively on uncertainty over Dublin's bank rescue measures. 


Oil & gas stocks also dropped, with the DJ STOXX European Oil & Gas Index .SXEP index down 1.5 percent, after BG Group (BG.L) posted a 44 percent drop in third-quarter net profits to 484 million pounds. 

BP (BP.L), Petroplus (PPHN.VX) and Total (TOTF.PA) were 0.6-7.3 percent lower, while crude CLc1 dropped 0.7 percent.

ArcelorMittal (ISPA.AS), the world's largest steelmaker, fell 3.2 percent. The company forecast core profit in the fourth quarter of $2.0 to $2.4 billion, below analysts' expectations. 

Shares in European tech companies dropped and the DJ STOXX European Tech Index .SX8P was down 3.3 percent, after industry bellwether SAP (SAPG.DE) cut its 2009 software sales outlook.

Sales were disappointing on all levels. Regarding the all-important licence sales, there was a clear shortfall of expectations. Add to this the sales outlook cut, said Nicolas von Stackelberg, analyst at Oppenheim Research.

On the upside, European telecoms was the only gaining sector, after BarCap initiated coverage on the sector with a positive view on recovery and returns.

Across Europe, the FTSE 100 .FTSE index, Germany's DAX .GDAXI and France's CAC 40 .FCHI were down 1.5-1.7 percent.

Later in the session, investors will eye U.S. Durable Goods figures to be released at 1230 GMT and U.S. New Home Sales data out at 1400 GMT.