* FTSEurofirst 300 down 0.6 pct, reversing two days of gains
* Concerns mount of debt contagion to Portugal, Spain
* Banks among the biggest fallers
* BT up 4.4 percent after selling stake in Indian IT group
By Harpreet Bhal
LONDON, Nov 26 (Reuters) - European shares fell on Friday on persistent concern Portugal could become the next country in the euro zone to seek financial help, with banking stocks particularly hard hit.
The pan-European FTSEurofirst 300 <.FTEU3> index of top shares closed 0.6 percent lower at 1,086.65 points, bringing total losses for the week to 1.4 percent.
"People are concerned about Portugal. If they don't find a solution to Portugal over the coming weekend, we will have a problem," said Heino Ruland, strategist at Ruland Research in Frankfurt.
Portugal had earlier denied a report in the Financial Times Deutschland which said the majority of euro zone states and the European Central Bank were urging Lisbon to seek a financial bailout. [ID:nLDE6AP0F4]
Some confidence was restored, however, after Portugal approved its 2011 austerity budget, vowing to spur growth and apply tough spending cuts in the hope of avoiding a bailout and causing 10-year Portuguese/German bond yield spreads to ease off earlier highs.
Banks were among the heavy fallers, with Banco Santander
Jitters remained ahead of an expected announcement on Sunday of the terms of Ireland's bailout, with the premium investors demand to hold Irish government bonds rather than benchmark German debt hitting a new euro-lifetime high.
That followed reports senior bondholders would share the cost of rescuing the country's banks. [ID:nLDE6AP0BY]
Ireland's government saw its parliamentary majority cut to two as the government conceded that the ruling party's candidate had lost a seat in the country of Donegal to Sinn Fein's Pearse Doherty. [ID:nLDE6AP0QC]
"Markets would be slightly calmer if they could see that this bailout is going to be carried through by politicians. But a potential change of government is making everyone nervous," said Keith Bowman, analyst at Hargreaves Lansdown in London.
Across Europe, Britain's FTSE 100 <.FTSE>, Germany's DAX <.GDAXI> and France's CAC40 <.FCHI> fell between 0.5 and 0.8 percent, while the Thomson Reuters Peripheral Eurozone Countries Index <.TRXFLDPIPU> was down 2.1 percent.
TAKE A LOOK- Europe's debt problems [nLDE68T0MG]
Euro zone debt struggle http://link.reuters.com/dah65q
Multimedia on Euro zone crisis http://r.reuters.com/hus75h
EU bailout graphic http://link.reuters.com/fac76q
Euro zone debt graphic http://r.reuters.com/hyb65p
Interactive timeline http://link.reuters.com/nyx95q
BEARISH TECHNICALS
Technical indicators pointed to a bearish outlook, with the euro zone's blue chip Euro STOXX 50 index <.STOXX50E> down 1 percent to just a touch above its 50 percent Fibonacci retracement of a fall from a high in April to a low in May.
Philippe Delabarre, technical analyst at Trading Central, said he expected a bearish trend on the index over the next two weeks, with the primary target level at 2,707 points, the second target at 2,692 points and with a stop loss at 2,775 points.
Mining companies were also on the back foot, pressured by
falls in metals prices as the dollar rose across the board.
Kazakhmys