* FTSEurofirst 300 closes 0.7 percent lower
* Subdued trading, with London closed
* Euro zone consumer prices fall less than forecast
By Brian Gorman
LONDON, Aug 31 (Reuters) - European shares closed lower on Monday, dragged down by falls in China and the United States, where financials slipped after a strong run.
The FTSEurofirst 300 index of top European shares fell 0.7 percent to close at 972.02 points, after hitting a 10-month high on Friday. The London market was closed for a holiday and will resume trading on Tuesday.
The index rose 4.7 percent in August and is up more than 50 percent from its lifetime low on March 9, as investors have become more confident on the prospects of economic recovery.
"There's been a pull-back in Europe after a good performance last week. Commodity prices are on the retreat following the performance of Asian markets this morning," said Gerhard Schwarz, head of global equity strategy at UniCredit, in Munich. "With the UK markets closed, we are a bit directionless."
The market would get direction from the European Central Bank's statement on Thursday and from U.S. labour data due Friday, he said.
Financials fell, notably in Ireland, hit by worries the government will not pay lenders the full price for commercial property loans when they are transferred over to a state-run "bad bank".
Bank of Ireland and Allied Irish Banks fell 7.8 percent and 4.9 percent respectively.
BNP Paribas, Banco Santander, Deutsche Bank, Intesa Sanpaolo , Societe Generale and UniCredit fell between 1 and 2.3 percent.
Oil prices tumbled 4 percent to below $70 a barrel as a fall in China's key stock index stoked worries about the country's economy. Royal Dutch Shell, Total and StatoilHydro lost 0.5-2.9 percent.
Automakers were also weaker in Europe, down 1.4 percent, and Porsche lost 3.2 percent.
About 370,000 employees of Volkswagen and Porsche plan to take a stake of up to 5 percent in the automotive group, VW's labour chief Bernd Osterloh told German newspaper Sueddeutsche Zeitung in an interview.
ARCELORMITTAL FALLS
Steelmaker ArcelorMittal eased 2.8 percent. The company said prices have improved but it would take one or two years for production levels worldwide to return to 2008 levels.
Chinese stocks sank 6.7 percent to a three-month closing low and recorded their second-biggest monthly loss in 15 years. Chinese share trading is largely cut off from global markets but the big drop in Shanghai had a psychological knock-on.
Back in Europe, euro zone consumer prices fell for the third month running year-on-year in August but by less than the record drop in July, and economists expect them to start growing again in coming months.
Among other individual movers in Europe, Deutsche Post fell 1.8 percent, after Juergen Gerdes, the head of the company's mail unit, said it needed to cut costs to avoid losses over the long run.
French Vivendi rose 0.5 percent, ahead of results on Tuesday and buoyed by an upgrade to 'buy' from 'add' from Oddo.
Across Europe, Germany's DAX and France's CAC-40 fell 1.0 and 1.1 percent respectively.
As European bourses were closing, the Dow Jones, S&P 500 and Nasdaq Composite were down 0.9-1.3 percent. (Additional reporting by Dominic Lau; Editing by Dan Lalor)