* FTSEurofirst down 1.1 percent
* Banks weaker as Goldman cuts price targets
* Porsche lower on merger delay
* Tullow rises on oil discovery
By Brian Gorman
LONDON, Sept 9 (Reuters) - European shares fell on Friday morning, tracking Wall Street lower on investors' worries that U.S policymakers were not acting strongly enough prevent the world's biggest economy from falling into recession.
At 0849 GMT, the FTSEurofirst 300 index of top European shares was down 1.1 percent at 929.48 points, after rising 0.9 percent in the previous session.
U.S. Federal Reserve chairman Ben Bernanke gave no indications of new stimulus measures, intensifying investor worries that major economies would fall into recession.
U.S. President Barack Obama challenged Congress on Thursday to enact a $447 billion package of tax cuts and new spending to revive a stalled job market, but traders and strategists said the proposals would only have a limited effect on investors' confidence, especially as they may not be passed given the uphill battle the Obama faces to win Republican support.
Stocks fell across the board, with the heavyweight banking sector among the losers.
"Investors are holding back because they can't read the market. There isn't any reason to commit until you can see credible policies," Justin Urquhart Stewart, director at Seven Investment Management, said.
"Bernanke was never going to say anything. He made it clear at Jackson Hole he was pushing it back to the politicians. Obama has come up with this stimulus package. We now have to digest what effect this will have, assuming it is passed."
Economists at Societe Generale said in a note the package might help boost U.S. economic growth. "If a miracle happens and the whole package is passed then the addition to GDP could be upwards of 1.6 percentage points, in other words (it would boost growth to) above 3 percent.
Banks fell after Goldman Sachs cut several target prices in the sector, including Societe Generale , down 6.5 percent.
The STOXX Europe 600 Banking Index fell 2.1 percent, and has lost more than 32 percent in 2011, as the euro zone debt crisis has taken its toll.
"If the governments choose to impose haircuts on banks' sovereign debt holdings, capital will need to be raised," Goldman said.
"We see banks that trade at reasonable valuations being able to do so in the market. However, those most likely to be effected would need to source capital in the public sector; their low valuations would likely make this prohibitively expensive for existing shareholders."
Across Europe, Britain's FTSE 100 fell 0.8 percent, Germany's DAX and France's CAC40 fell 1.7 and percent respectively.
Italy's benchmark fell 2.2 percent, with banking heavyweight Unicredit . also hit by a Goldman target cut, down 4.1 percent.
RECESSION WORRIES
The pan-European index is down more than 17 percent this year. Investors have cut their exposure to risky assets such as stocks following an escalation of the euro zone debt crisis, and weak economic data from major economies that have sparked concern they may go back into recession.
Credit Suisse raised the probability of a mild recession to 25 percent from 20 percent because of the bearish economic data released over the past two weeks, it said in a note.
In response, it downgraded equities to "benchmark" from 2 percent "overweight" in its global asset allocation recommendation.
Among individual shares, Porsche
The auto sector fell 3 percent.
British firm Tullow Oil rose 9 percent after it said its Zaedyus exploration well, offshore French Guiana, found oil.
Bayer
(Editing by Sophie Walker)
============================================================ For rolling updates on what is moving European shares please click on ============================================================ For pan-Europeanmarket data and news, click on codes in brackets: European Equities speed guide................... FTSEurofirst 300 index.............................. STOXX Europe index.................................. Top 10 STOXX sectors........................... Top 10 EUROSTOXX sectors...................... Top 10 Eurofirst 300 sectors................... Top 25 European pct gainers....................... Top 25 European pct losers........................
Main stock markets: Dow Jones............... Wall Street report ..... Nikkei 225............. Tokyo report............ FTSE 100............... London report........... Xetra DAX............. CAC-40............... World Indices.....................................<0#.INDEX> Reuters survey of world bourse outlook......... Western European IPO diary......................... European Asset Allocation........................ Reuters News at a Glance: Equities................. Main currency report:.................................