* FTSEurofirst 300 down 0.4 pct; falls for third session
* Financials, automakers feature among top decliners
* For up-to-the-minute market news, click on [STXNEWS/EU]
By Atul Prakash
LONDON, May 16 (Reuters) - European shares hit their lowest in more than a week on Monday, with investors selling riskier assets ahead of a meeting of the euro zone finance ministers that is likely to press Greece to take more austerity steps.
The ministers are expected to back a bailout package for Portugal, with new conditions set by Finland, in talks overshadowed by charges against IMF chief Dominique Strauss-Kahn for attempted rape. [ID:nN15215355]
A 5.3-percent rise in the Euro STOXX 50 volatility index <.V2TX>, one of Europe's main barometers of market sentiment, suggested a fall in investors' risk appetite, but analysts stayed positive on the stock market's longer-term outlook.
At 0843 GMT, the FTSEurofirst 300 <.FTEU3> index of top European shares was down 0.4 percent at 1,136.07 points after falling to a low of 1,132.56 -- the lowest since May 6. Greek shares <.ATG> fell 1.7 percent, while the Athens bourse's banking index <.FTATBNK> was down 2.3 percent.
"We are seeing the signs of nervousness perhaps in trying to establish a very decisive policy framework to get the euro zone settled. There might be some complications involved, but hopefully that will happen," said Mike Lenhoff, chief strategist at Brewin Dolphin.
"I don't think that the fundamental picture is that bad at all. We saw incredibly strong growth out of France and Germany and we are getting to see growth in the U.S. non-farm payrolls. And the earnings results that we have seen were pretty good, on balance."
Banks featured among the top decliners, with the STOXX 600 Europe bank index <.SX7P> down 1.1 percent to its lowest level in more than five months, with the arrest of Strauss-Kahn adding uncertainty to the euro zone's debt crisis.
France's Societe Generale
"Investors are starting to worry about the future and most of these worries centre around Greece. Some additional help for Greece will be announced in the not too distant future because there is not much of a choice," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
"European policy makers seem determined to want to prevent a Lehman Brothers like market impact. However, opposition to this aid is growing and bodies like the EC and the IMF will need all their strength and credibility to pull this off. Therefore the news surrounding Strauss-Kahn may be an additional focus point of worry."
A senior Greek government official said on Sunday the arrest of Strauss-Kahn may cause some delays to an EU/IMF bailout plan. [ID:nLDE74E0BG]
LONGER-TERM OUTLOOK
Analysts, however, said that European stocks had potential to scale new highs in the coming months on an improving macroeconomic picture and generally stronger company results.
Richard Greenwood, fund manager at Bedlam Asset Management, which manages about $700 million, said the industrial sector was expected to benefit going forward.
"I would expect the euro to be weakening somewhat against the dollar and other currencies in the next six months and I would see that benefitting a lot of exporting manufacturers and industrials."
Investors kept a close eye on Glencore [GLEN.UL]. A source said the commodities trader has tightened guidance for its planned $11 billion initial public offering, pushing up the mid-point of the marketing range, in a sign it has seen stronger demand at the higher end of an indicative range. [ID:nL4E7GG0BG]
Auto shares featured among the top fallers, tracking a wider market sell-off, with the sector index <.SXAP> down 1.1 percent.
But Spyker Cars