* FTSEurofirst 300 falls 0.2 percent
* Philips slumps as profit falls
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By Atul Prakash
LONDON, Jan 24 (Reuters) - European shares dropped on Monday as figures showing uneven growth in the euro zone's services sector and political problems in Ireland hurt sentiment and prompted investors to scale back their trading positions.
At 1248 GMT, the FTSEurofirst 300 index of top European shares was down 0.2 percent at 1,146.16 points after falling 0.7 percent last week. Automakers featured among the top decliners, with the STOXX Europe 600 Automobile and Parts index falling 1.9 percent and Porsche down 5 percent.
A Markit survey showed vibrant growth in Germany helped the euro zone's services sector expand faster in January, but warned that behind the strong headline figures, there were few signs that firms in peripheral countries like Ireland and Spain were catching up with peers in Germany and France.
"Germany is powering ahead much more than anybody expected. But peripheral countries are suffering and if people get more and more nervous, the governments will have a very hard time to stay in power," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
"That's clearly impacting the market today. People are also worried about inflation picking up in emerging economies and these countries will have to intervene aggressively to come up with ways to slowdown the economy, which will also have an impact on us."
Germany's DAX, which outperformed the wider stock market in 2010, was down 0.5 percent, while the Thomson Reuters Peripheral Eurozone Countries Index fell 0.4 percent.
EQUITY FUND INFLOWS
Fund-tracker EPFR Global said on Friday fresh cash moving into all-equity funds hit a five-week high of $10.1 billion in the week ended Jan. 19, with nine out of 10 of those dollars going into European stock funds was destined for German equities.
"There is an increasing fear that European markets will begin to struggle from here on and that inflation cannot be ignored. Ireland doesn't help either in terms of sentiment," said Howard Wheeldon, senior strategist at BGC Partners. Ireland's junior coalition party withdrew from Prime Minister Brian Cowen's government on Sunday, signalling the end of a crisis-riddled administration.
The Greens said, however, they would support legislation underpinning the 2011 budget, as agreed under an 85 billion euros EU/IMF bailout, to ensure a swift election, possibly in February. Ireland's benchmark index was up 0.6 percent.
Britain's major banks fell after a weekend speech by the head of the UK's Independent Commission on Banking, set up to probe a shake-up of the sector, raises concerns the banks may have to raise more capital to make their retail bank arms safer.
Lloyds, Royal Bank of Scotland and Barclays fell 1.3 to 3.3 percent.
Miners also lost ground as prices of some key base metals fell. The STOXX Europe 600 Basic Materials index was down 0.5 percent, while Antofagasta dropped 1.4 percent.
Philips Electronics fell 5.8 percent after it reported lower-than-expected fourth-quarter net profit, as poor TV sales hit its lifestyle division, and warned that consumers in mature markets will be reluctant to spend this year. (Editing by Jon Loades-Carter)