(Rewords first line of paragraph 8 to remove reference to data being downbeat and affecting sentiment)
* FTSEurofirst 300 down 1 percent; retreats from one-week high
* Commodity, chemical shares among big decliners
* Investors await U.S. ADP jobs data
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By Harpreet Bhal
LONDON, Jan 5 (Reuters) - European shares were lower on Wednesday, hit by a retreat in commodity shares ahead of the release of U.S. private sector employment expected to highlight the pace of recovery in the jobs market.
By 1142 GMT, the pan-European FTSEurofirst 300 index of top shares was down 1 percent at 1,130.80, having ended at a one-week closing high in the previous session.
Commodity shares were on the back foot, following hefty gains in the previous session, with metals prices retreating as risk aversion took hold.
Anglo American, BHP Billiton, Kazakhmys and Rio Tinto shed 1.5 percent to 3 percent.
Investors will closely monitor data from across the Atlantic for further evidence on the state of the U.S. recovery, after minutes from a Federal Reserve meeting showed policymakers felt the economy still needed help despite signs of strength.
"Growth in the labour market one of the biggest deciding factors for markets this year, that is why we are seeing investors a bit cautious ahead of the (jobs) numbers. If the job figures are good, we could see a push higher," said David Jones, market strategist at IG Index.
The ADP National employment survey for December, a precursor to Friday's non-farm payrolls report, was due at 1230 GMT while U.S. ISM non-manufacturing data was set for 1500 GMT.
Data from the euro zone showed service sector growth slowed in December after activity in Ireland and Spain shrank, highlighting a two-speed regional recovery as business continued to expand in France and Germany.
RISK AVERSION RISES
The VDAX-NEW volatility index, one of Europe's main barometers of investor anxiety, rose 4.9 percent to a one-month high, signalling a rise in investor aversion for risky assets, as results from Portugal's treasury bill auction revived concerns over debt-ridden euro zone countries.
Portugal's six-month borrowing costs soared from a previous auction in September.
"There might just be an element of nerves creeping back into the market as investors return to their desks," said Keith Bowman, equity analyst at Hargreaves Lansdown.
European chemical shares were among the fallers, with the STOXX Europe 600 chemicals index down 1.6 percent on concerns about a slowdown in world demand.
Global chemicals market leader BASF fell 3.3 percent, with traders pointing to profit taking following a strong run. The stock had gained almost 22 percent since early October.
British music, books, DVDs and games retailer HMV slumped 20 percent after it said full-year profit would be around the lower end of forecasts and meeting the terms of its lending rules would be tight after bad weather hit Christmas trade.
Within the sector, Burberry, Kingfisher and Marks & Spencer shed 1.4-2.7 percent.
Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC 40 shed 0.7-1.6 percent. (Additional reporting by Atul Prakash; Editing by Dan Lalor)