* FTSEurofirst 300 falls 0.7 percent; slips below 1,000 mark
* Financial shares among top decliners
* Energy shares, miners slip; weaker commods prices weigh
By Simon Falush
LONDON, Sept 21 (Reuters) - European shares posted a second straight session of losses on Monday, weighed down by weaker banks as investors retreated from risky assets ahead of a U.S. Federal Reserve meeting and G20 summit.
Anxiety that a sharp stock market rally since March might be overdone amid continued weakness in the global economy prompted investors to cut their exposure to stocks and take refuge in assets such as the dollar.
The FTSEurofirst 300 <.FTEU3> index of top European shares closed down 0.7 percent at 999.06 points after falling 0.5 percent on Friday. The index rose above 1,000 on Wednesday after an 11-month gap and hit a year high of 1,013.63 a day later.
Financial stocks were among the biggest decliners, with
Standard Chartered
Royal Bank of Scotland
SEB
FED FOCUS
The index has rallied 54.8 percent since hitting a record low in March and is up 17.5 percent this quarter, on track to post its best quarterly rise in almost a decade.
Investors this week were focussed on an upcoming Fed meeting. The U.S. central bank is expected to keep its benchmark Fed Funds rate unchanged at 0.25 percent, but investors are looking for signs of how quickly it might remove its extraordinary programmes to revive lending and hiring.
"With the run up to the Federal Reserve meeting on Wednesday stock indexes could remain nervous and under pressure," Nick Serff, Market Analyst at City Index said.
"Investors will not be expecting any change in U.S. rates but will be very keen for signs as to when monetary policy could start to tighten."
Investors also awaited the outcome of a meeting of the Group of 20 leaders on Thursday and Friday in Pittsburgh.
U.S. President Barack Obama said he would push world leaders to reshape the global economy in response to the crisis.
The VDAX-NEW volatility index <.V1XI> jumped 5.8 percent and touched a week high. The higher the volatility index, which is based on sell and buy options on Frankfurt's top 30 stocks <0#.GDAXI>, the lower investors' appetite for risk.
Miners came under pressure following metals prices, which
fell on concerns about rising inventories and a firmer dollar.
Anglo American
BHP Billiton
But some analysts remained optimistic that the equity market has still got more room for growth.
"We are still quite bullish," said Nick Nelson, European equity strategist at UBS.
"The market might look slightly overbought near term, but the economy is definitely improving, corporate profits are definitely improving, interest rates are staying low and valuations aren't expensive."
Defensives supported the index as investors moved into stocks seen as better placed to weather a weaker economy.
AstraZeneca
Energy shares were mostly weaker, tracking crude oil prices
BG Group
Bank of England Monetary Policy Committee member Andrew Sentance said there are big upside risks to energy prices when the global economy recovers. [ID:nLL691805] (Additional reporting by Dominic Lau)