* FTSEurofirst 300 index down 1.3 pct
* Banks fall ahead of ECB rate decision
* Commods lower tracking weaker metal, crude prices
By Joanne Frearson
LONDON, July 2 (Reuters) - European shares were lower in early trade on Thursday as investors took a cautious stance ahead of U.S. non-farm payroll figures and the ECB rate decision, with banks and commodities the biggest fallers.
By 0815 GMT, the pan-European FTSEurofirst 300 <.FTEU3> index of top shares was down 1.3 percent at 854.87 points after rising 1.8 percent in the previous session.
The benchmark index, which slumped 45 percent in 2008, gained nearly 16 percent in the second quarter, its best performance since late 1999.
Banks were among top losers on the index. Banco Santander
"I do not think the ECB will do anything with interest rates today. But, I am quite sure ECB President Jean-Claude Trichet will effectively argue about the way the banks have been handling cheap cash. Banks have not been passing it on to the corporate sector or to private households," said Heino Ruland, strategist at Ruland Research.
"Instead they have been gambling in corporate bonds and using the money to restore profitability that they lost through investing in asset-backed securities. I think Trichet will question the banking sector on this. It is one of the reasons why banks are not in the best shape," said Ruland.
Eighty one of 82 economists polled by Reuters forecast the European Central Bank would leave the refinancing rate at 1.0 percent, and the Governing Council will probably repeat that rates are appropriate at the current record low. [ID:nL2512532]
COMMODITIES FALL
Energy stocks were the biggest losers after crude
Miners were in the doldrums as copper
Anglo American
Later in the session, investors are likely to focus on the U.S. Employment report for June, due at 1230 GMT. Economists in a Reuters survey forecast that 363,000 jobs were lost in the month compared with a loss of 345,000 jobs in May.
"The non-farm payrolls are probably not necessarily going to be good news. It is a lagging indicator so it is likely to continue to get worse before it gets better," said Justin Urquhart Stewart, director at Seven Investment Management.
Meanwhile, U.S. factory orders are released at 1400 GMT. Economists in a Reuters survey expect orders to rise 0.8 percent compared aith a 0.7 percent increase the prior month.
Across Europe, the FTSE 100 <.FTSE> index was down 1 percent, Germany's DAX <.GDAXI> was 1.6 percent lower and France's CAC 40 <.FCHI> was down 1.3 percent. (Reporting by Joanne Frearson; Editing by Hans Peters)