* FTSEurofirst 300 down 1 pct; hits 10-mth low
* Growth fears resurface after poor manufacturing data
* Technical outlook bearish; more declines on cards
By Atul Prakash
LONDON, Aug 2 (Reuters) - European shares fell for a third straight session to hit a 10-month low on Tuesday as bleak U.S. manufacturing data raised concerns about the health of the global economy, while charts pointed to further weakness for major equity indexes.
Shares in personal and household goods companies , down 1.6 percent, were among the top decliners, led by a 62-percent slump in Danish jewellery maker Pandora after the company cut its full-year outlook owing to rising costs and a sharp fall in revenue.
At 0926 GMT, the FTSEurofirst 300 index of top European shares was down 1 percent at 1,057.39 points after falling as low as 1,056.81, the lowest since October 2010. The index, which has fallen in 6 of 7 sessions, is down more than 5 percent so far this year.
Italy's FTSE MIB index fell 1.8 percent to its lowest in more than 27 months on worries that Italy could leapfrog Spain to become the next most likely victim of the euro zone crisis.
Analysts said the euro zone's blue chip Euro STOXX 50 index was heading towards a major low of around 2,448 points reached in May last year. On Tuesday, it was down 1 percent at 2,567.15 after hitting 11-month lows.
"It looks like investors have just forgotten about the debt ceiling deal in Washington and instead are focusing on the economic data, which was clearly weaker than anticipated," said Bill McNamara, analyst at Charles Stanley.
"The uptrend is clearly over. The Euro STOXX 50 looks relatively oversold, but in extreme cases, the 14-day relative strength index (RSI) for this index has a habit of dropping back to about 20. That could easily happen again."
The RSI for the index was last at 32. A level of 30 and below is considered as oversold and 70 and above is considered as overbought.
Analysts saw near-term support for the index at around 2,557, its 38.2-percent retracement of a rally that began in March 2009, and said that investors will stay jittery following sluggish global manufacturing data on Monday and on concerns about a possible downgrade of the U.S. credit rating.
Washington looked to have averted a debt default after the House of Representatives approved a deal to raise the government's borrowing limit, but investors stayed concerned the United States could still lose its triple-A credit rating.
"The macroeconomic figures that we saw have certainly given investors serious considerations to question the speed of global economic recovery," said Keith Bowman, equity analyst at Hargreaves Lansdown.
"In the background, we have got the rating agencies' potential comments on the U.S. credit rating."
EURO ZONE DEBT CONDITION
Five-year credit default swaps on Spanish and Italian debt rose on worries that the latest bailout for Greece does not go far enough to ringfence the region's bigger economies from contagion.
Officials from the Italian economy ministry, the Bank of Italy and market authorities are to meet on Tuesday to discuss the market turbulence which has sent Italian bond yields to record levels, a source with knowledge of the meeting said.
The Thomson Reuters Peripheral Eurozone Banks index fell 1.4 percent on writedowns and capital hike fears for banks. European banking index was down 0.5 percent, while Italian banks UniCredit and Intesa Sanpaolo fell 2.5 percent and 3.4 percent respectively.
BNP Paribas regained some ground after early steep falls to be down 0.1 percent by 1004 GMT. The bank fell short of profit expectations for the second quarter, hit by its Greek exposure and sluggish growth in its retail and investment banking units.
Miners also lost ground on worries about global demand for raw materials. The sector index was down 1.9 percent.
Among individual movers, Wacker Chemie fell 9.7 percent after the world's No.2 maker of polysilicon's second-quarter results disappointed as rising raw material costs hit earnings.
(Editing by Sophie Walker)
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