* FTSEurofirst 300 index sheds 0.3 percent
* Banking sector worries weigh on financial firms
* Weak U.S. consumer sentiment reading rattle confidence
By Harpreet Bhal
LONDON, Sept 17 (Reuters) - European shares fell on Friday, as confidence was stung by data showing U.S. consumer sentiment fell to its lowest level in more than a year, and with banks lower on renewed worries over the sector's financial health.
The pan-European FTSEurofirst 300 index of top shares closed 0.3 percent lower at 1,072.87 points, ending at its lowest closing level in over a week.
Banks were among the decliners, following a report in the Irish Independent newspaper on the possibility of an International Monetary Fund (IMF) bailout for the country. Allied Irish Banks fell 11.1 percent, Societe Generale lost 2.9 percent and Barclays shed 3.2 percent.
The Irish Finance Ministry said there was no truth to the rumours and the International IMF said it does not foresee its assistance being needed for Ireland.
"It seems to be new twists on familiar worries nagging traders today as concerns there could be more pain to come for some of the euro-region banks continued to weigh," said Ben Critchley, Sales Trader at IG Index.
The cost of insuring Irish sovereign debt against default hit a record high and the Irish/German spread reached a euro lifetime peak on persisting worries about funding Ireland's banking sector.
Adding to the negative outlook, the Thomson Reuters/University of Michigan index of consumer sentiment unexpectedly worsened in early September to its lowest level since August 2009 -- heightening worries over the pace of economic recovery.
"With the economic backdrop still providing the odd negative surprise at the moment, we look set for more volatile sessions next week," Critchley said.
CARREFOUR STRONG
Among the gainers, Carrefour jumped 4.6 percent after the world's No.2 retailer unveiled a revamp plan for its European hypermarkets which it said could more than double profit by 2015.
Invensys gained 3.2 percent after the engineer signed an agreement with Chinese rolling stock maker CSR Corporation to enable CSR's signaling company to license and manufacture its interlocking technology for the mass transit market.
On the downside, mobile telecoms equipment giant Ericsson shed 2.5 percent, extending losses on Thursday following talk the company is guiding for lower profits, and after CEO comments on pricing pressure.
Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC 40 fell 0.4 to 0.6 percent.
The Euro STOXX 50, the euro zone's blue-chip index, fell 1 percent to 2,757.37 points -- below 2,805.95, the 61.8 percent Fibonacci retracement of the index's fall from an April high to a May low.
The index is still below Monday's high and its early August high, with analysts suggesting it is stuck in a five-month range. (Editing by Hans Peters)