* FTSEurofirst 300 falls 0.8 pct
* Societe Generale down on profit warning
* Data sparks worries about recession
By Brian Gorman
LONDON, Aug 3 (Reuters) - European shares fell sharply on Wednesday, tracking steep price falls on Wall Street and Asia, on escalating worries about the global economy after a raft of weak data and fears over the euro zone debt crisis spreading to Italy.
At 0856 GMT, the FTSEurofirst 300 index of top European shares was down 0.8 percent at 1,040.63 points, having gone as low as 1,031.66 earlier in the session, and after hitting an 11-month closing low in the previous session.
French bank Societe Generale fell 6.8 percent after warning it would struggle to reach its 2012 profit target as its exposure to Greece and a tougher economic backdrop took its toll on second-quarter earnings.
"It's a lower, slower world," said Justin Urquhart Stewart, director at Seven Investment Management. "The corporate results are telling us a not bad story but that's the rear view. The outlook is lower and slower."
"The U.S. debt issue has not been resolved. There's a new bandage, but no one is looking at the festering wound underneath. U.S. debt wiIl be downgraded. It's just a question of when."
U.S. data in recent days has shown weakness in consumer spending, manufacturing and GDP growth, sparking worries the world's biggest economy could be heading back into recession.
The United States stepped back from the brink of default on Tuesday but congressional approval of a last-ditch deficit-cutting plan failed to dispel fears of a credit downgrade and future tax and spending feuds.
"People are focusing on the employment report on Friday, for confirmation that the world's biggest economy is in dire trouble," said Jeremy Batstone-Carr, strategist at Charles Stanley.
"They're also looking to see what will happen at next week's FOMC. Ben Bernanke's silence throughout all this has been deafening. There is hope the Fed may announce another round of quantitative easing."
The ADP Employment Report, a harbinger for Friday's non-farm payrolls, is due at 1215 GMT.
The price of gold hit yet another record.
"If you're sitting in the euro zone periphery and your banks are in serious trouble, you get your money out and you get it into Swiss francs and gold," Batstone-Carr said.
But base metals such as copper edged lower, on worries about demand. The Stoxx Europe 600 Basic Resources index fell 2 percent, and is down more than 17 percent in 2011.
BANKS MIXED
However, the STOXX Europe 600 banking sector index edged into positive territory, bouncing from 27-month lows, having been boosted by some strong results and the recovery of some stocks from steep falls in the previous session.
Asia-focused bank Standard Chartered rose 1.9 percent after reporting a record-beating 17 percent rise in first-half profits as a booming Hong Kong market and increased restraint on costs outweighed a slump in India.
Italian banks UniCredit and Intesa SanPaolo rose 1.5 and 0.6 percent respectively.
The Thomson Reuters Peripheral Eurozone Banking Index was up 2.2 percent.
Italian Prime Minister Silvio Berlusconi speaks to parliament later on Wednesday to try to calm fears over escalating market turmoil that has brought Italy to the edge of a Greek-style financial crisis.
Yields on Italian 10 year-bonds slipped, but were still above 6 percent, a level largely seen as unsustainable.
Across Europe, Britain's FTSE 100 was down 1.1 percent; Germany's DAX and France's CAC40 fell 0.7 and 0.6 percent respectively.
Among other individual shares, Suez Environnement rose 2.3 percent after saying first-half core earnings rose 18.3 percent due to higher demand for water and waste management in Europe and the integration of two takeovers, including Spanish water services company Agbar. (Editing by Greg Mahlich
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