* FTSEurofirst 300 falls 1 percent, hits 4-week lows
* Banks, commodity shares top weighted losers
* U.S. non-farm payrolls due at 1230 GMT
* For up-to-the-minute market news, click on
By Dominic Lau
LONDON, Oct 2 (Reuters) - European shares hit a four-week low on Friday, extending the previous day's sharp losses, as investors were nervy before the U.S. jobs figures after data this week cast doubt about the strength of the recovery.
By 0757 GMT, the FTSEurofirst 300 was down 1 percent at 971.93 points, after falling 1.6 percent on Thursday to a three-week closing low.
The index, posting its best quarterly gains in nearly 10 years in the last quarter, was on track for a third day of losses.
"We have been waiting for a correction for quite a while," said Heino Ruland, strategist at Ruland Research, in Frankfrut.
"The third quarter performed pretty strongly. With the beginning of the fourth quarter, we have to realise that the economy is by far not in the shape which the performance of the equity market would suggest."
Banks, which have rallied 160 percent since March, were among the top losers on concerns over the growth picture.
KBC, UBS, Barclays, Societe Generale, BNP Paribas, Deutsche Bank, Credit Suisse and Commerzbank lost 1.1 to 6.8 percent.
But HSBC put on 0.6 percent, as traders said the bank was the most defensive in the sector.
Heavyweight commodity shares, which have also performed strongly in the rally, were out of favour. BP, Royal Dutch Shell , BG Group and Total dropped 0.4 to 1.1 percent.
Among miners, BHP Billiton, Rio Tinto, Anglo American, Xstrata, Vedanta Resources and Kazakhmys were down 0.3 to 2.1 percent.
All eyes will be on the U.S. non-farm payrolls data, due at 1230 GMT, for further evidence of the pace of the recovery in the world's largest economy.
Economists in a Reuters survey forecast 180,000 jobs were lost in the month compared with a loss of 216,000 jobs in August, while the unemployment rate is seen at 9.8 percent, compared a 9.7 percent rate the prior month.
The dollar held steady against most major currencies with investors sitting tight ahead of the jobs data.
The pan-European index, which slumped 45 percent last year, has rallied nearly 51 percent since hitting a floor in early March, and is up 16.8 percent so far this year.
LOW RISK APPETITE
The VDAX-NEW volatility index was up 6 percent after hitting a four-week closing high on Thursday. The higher the index, the lower is investors' appetite for risky assets.
Across Europe, Britain's FTSE 100 lost 0.7 percent, Germany's DAX fell 0.8 percent and France's CAC 40 shed 1.3 percent.
Overnight, the Dow Jones industrial average and the S&P 500 suffered their worst one-day fall in three months, while Japan's Nikkei average fell 2.5 percent.
"Consumer expectations are now extremely stretched relative to the dismal reality. This also occurred during the early 1990s credit crunch," Societe Generale's Albert Edwards said in a note.
"Back then expectations also ran up far ahead of reality. Interestingly, after the recession had ended in March 1991, excessively optimistic expectations slumped three more times until muddling reality caught up with excessive hope. Markets still have too much hope."
European automakers were also weak after September U.S. auto sales tumbled by 23 percent as showrooms emptied after the government-funded boom from the "cash for clunkers" programme.
Daimler, Renault, Peugeot, BMA and Volvo were off 0.4 to 2.8 percent, but Volkswagen advanced 0.8 percent.
Alcatel-Lucent, ASML Holding, Cap Gemini and STMicroelectronics lost 2.4 to 5.2 percent, leading the tech sector lower.
Carlsberg eased 4.5 percent after Deutsche Bank downgraded the brewer to "sell" from "hold".