European shares fell for a second straight session on Friday, led down by weak financial stocks, with trading volumes low as investors remained cautious ahead of keenly watched U.S. payrolls data later in the session.

At 1223 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.4 percent at 1,010.54 points after falling 0.2 percent in the previous session. The index is still up 21 percent in 2009 and has surged 56 percent since hitting a record low in March.

Just over 74 million shares on the index had changed hands by midday, against a daily average of 225 million in November.

Banks were hit hard, with Standard Chartered (STAN.L), HSBC (HSBA.L), Barclays (BARC.L), Lloyds (LLOY.L), Credit Agricole (CAGR.PA) and Credit Suisse (CSGN.VX) falling 1 to 4.1 percent.

Royal Bank of Scotland (RBS.L) fell 2.1 percent. It has indicated it will bow to pressure to pay investment bankers at the 70 percent state-owned bank substantially less than rival institutions, The Financial Times reported. 

Investors are just cautious ahead of the U.S. payrolls data, especially after yesterday's ISM figures for the service sector which were below expectations, said Tammo Greetfeld, equity strategist at UniCredit.

But if we put it into a broader context, we are convinced that the parameters for a continuation of the uptrend are still intact, he added.

Data on Thursday showed the U.S. services sector index fell to 48.7, indicating that this huge component of the U.S. economy had experienced contraction last month., 

Investors awaited the U.S. monthly employment report, due at 1330 GMT for clues to the pace of recovery in the world's largest economy. Economists forecast the U.S. economy lost 130,000 jobs in November, compared with 190,000 in October.

Technical charts suggested the FTSEurofirst 300 index faced Fibonacci resistance at around 1,023 points -- its 38.2 percent retracement of the major fall from July 2007 to March 2009. The index has failed to convincingly break the level despite repeated attempts in the past seven weeks.

A clear break of the 38.2 percent retracement level could pave the way for more gains.

Insurance shares were also under pressure, with Prudential PRU.L, Aviva

Across Europe, Britain's FTSE 100 index .FTSE, Germany's DAX .GDAXI and France's CAC 40.FCHI fell 0.5-0.6 percent.

AUTOMOBILE SHARES SKID

Automakers also faced pressure. BMW (BMWG.DE), Daimler AG (DAIGn.DE), Porsche (PSHG_p.DE), Volkswagen AG (VOWG.DE), Peugeot (PEUP.PA), Renault (RENA.PA), Fiat (FIA.MI) were down 0.2 to 1.6 percent.

With equities having recovered well off last week's lows, there's certainly scope to see another bout of profit taking in the short term, although the lead here is more than likely to come from New York, said Anthony Grech, strategist at IG Index. But pharmaceutical shares, generally seen as defensive plays, were in demand. GlaxoSmithKline (GSK.L), Novartis (NOVN.VX) and Novo Nordisk (NOVOb.CO) gained 0.1-0.7 percent.

AstraZeneca (AZN.L) was up 1.3 percent. It's schizophrenia drug Seroquel XR has won U.S. approval as an add-on treatment for depression, but regulators said they needed more information before allowing its use as a single agent. 

Norway's Tandberg ASA (TAA.OL) rose 0.5 percent. Crg, paving the way toward creating the world's leader in video conferencing equipment, although acceptances from shareholders were slightly below its target.

Cisco said about 89 percent of shareholders accepted the 19 billion Norwegian crown ($3.4 billion) deal. That was lower than the 90 percent Cisco had set as a minimum requirement, but the company said it would waive this condition.