* FTSEurofirst 300 down 0.4 pct, down 6 pct in 3 weeks
* Ireland's downgrade hits Irish banking stocks
* Heineken up on forecast-beating results
By Blaise Robinson
PARIS, Aug 25 (Reuters) - European stocks lost ground on Wednesday morning, adding to the previous session's sell-off on mounting economic fears and after Standard & Poor's cut Ireland's credit ratings.
At 0908 GMT, the FTSEurofirst 300 index of top European shares was down 0.4 percent at 1,015.76 points, after dropping 1.6 percent in the previous session following grim U.S. economic data. The index has lost nearly 6 percent over the past 3 weeks.
The Euro STOXX 50, the euro zone's blue chip index, was down 0.3 percent at 2,607.03 points.
Irish banking stocks were under pressure, with Bank of Ireland down 2.7 percent and Allied Irish Banks down 2.3 percent after S&P's downgraded its credit ratings on Ireland and assigned the country a negative outlook, citing substantially higher costs to support its struggling financial institutions.
"The strong corporate earnings we got during the summer had eclipsed the euro zone's sovereign debt fears in investors' minds, but this downgrade is a reminder that the problems have not gone away," said Christian Jimenez, fund manager and president of Diamant Bleu Gestion, in Paris.
"Fortunately, the recent wave of M&A activity is providing some support to stocks and prompt investors to do some picking, although it's not enough to reverse the recent negative trend."
The cost of protecting Irish government bonds from default rose and the premium investors demand to buy Irish debt rather than German benchmarks climbed in the wake of the downgrade.
BHP Billiton, which has made a $39 billion hostile bid for Potash Corp, fell 0.2 percent after posting a 47 percent rise in second-half profit, but said it was cautious on the short-term global outlook and that the economy in China, its biggest customer, would slow from recent highs.
Heineken NV gained 0.8 percent after the world's third-largest brewer reported forecast-beating first-half net profit, as cost savings helped offset declining beer sales.
Around Europe, UK's FTSE 100 index was down 0.1 percent, Germany's DAX index flat, and France's CAC 40 down 0.1 percent.
Investors took some comfort in data showing German business sentiment unexpectedly rose in August. The Munich-based Ifo think tank said its business climate index, based on a monthly survey of some 7,000 firms, rose to 106.7 from 106.2 in July, above the mid-range economist forecast of a fall to 105.7.
Following the data, the euro rose to a session high against the dollar while German Bund futures extended losses, and stocks briefly turned positive.
Investors were also bracing for U.S. monthly durable goods orders, due at 1230 GMT, and new home sales, due at 1400 GMT.
On Tuesday, data showed sales of previously owned U.S. homes took a record plunge last month, sparking a sell-off in equities.
(Editing by David Cowell)