gopalakrishna

* FTSEurofirst 300 falls 0.8 pct, trimming Wednesday's gains

* Ifo German business sentiment index disappoints

* Energy shares fall along with oil

* Banks rise after Credit Suisse's Q2 result beats forecasts

By Patrizia Kokot

LONDON, July 24 (Reuters) - European shares indexes fell in early trade on Thursday, trimming some of the previous session's strong gains after disappointing economic data and as energy stocks dropped along with oil prices.

But the losses were limited by a rally in banking stocks after Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) beat expectations with its second-quarter earnings report, sending its shares up 5.1 percent.

By 0849 GMT the FTSEurofirst 300 index was down 0.8 percent at 1,180.02 points, having earlier risen to as high as 1,194.54 points. The index gained 2 percent on Wednesday.

"The decline in crude is weighing on the oil stocks but what is really dreadful is the economic data," said Mic Mills, a risk trader at Tradindex, pointing to the Ifo German corporate sentiment index, which came in well below expectations.

"In history the crash of Ifo expectations was followed by lower earnings expectations for the following business year," said strategist Andreas Huerkamp at Commerzbank in Frankfurt.

The Euro zone flash purchasing managers index (PMI) for July also failed to meet expectations as French business confidence dropped to its lowest level in three years.

Commodities were the largest drag on the index as oil CLc1 traded below $125 a barrel. BP (BP.L: Quote, Profile, Research, Stock Buzz) and Total (TOTF.PA: Quote, Profile, Research, Stock Buzz) shed 0.7 and 1.4 percent respectively.

Banks on the other hand extended a 6.2 percent rally seen on Wednesday in the DJ Stoxx banking sector index and added 0.3 percent. Credit Agricole (CAGR.PA: Quote, Profile, Research, Stock Buzz) gained 3.2 percent and Deutsche Bank (DBKGn.DE: Quote, Profile, Research, Stock Buzz) rose 1.5 percent.

"Credit Suisse has reclaimed its status as a survivor of the credit crisis. Positive results in the investment banking segment, while humble, underscore that the one bank model has a future at Credit Suisse," said Isabel Schauerte, an analyst at Celent, in a note.

Morgan Stanley upgraded the European banking sector to "in-line" from "cautious" and said some 40 percent of the banks it covers are now either below or no more than 10 percent above its bear case valuations.

Across Europe, Britain's FTSE .FTSE was down 0.8 percent, Germany's DAX .GDAXI fell 0.4 percent and France's CAC .FCHI lost 0.6 percent.

ABB, STORA ENSO DISAPPOINT

In the FTSEurofirst 300 index, decliners outnumbered advancers roughly by two to one with engineering groups among prominent fallers after investors took profits in ABB (ABBN.VX: Quote, Profile, Research, Stock Buzz) despite solid results from the Swiss group. The stock shed 5.5 percent.

And paper and board maker Stora Enso (STERV.HE: Quote, Profile, Research, Stock Buzz) lost 7.3 percent after the company reported a lower than expected second-quarter operating profit and gave a cautious outlook.

Banco Popular (POP.MC: Quote, Profile, Research, Stock Buzz) traded 7.2 percent lower as its first-half figures also fell short of expectations, with the results reflecting the bank's exposure to the two largest property failures in Spain.

Among the gainers, Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz) added 1.6 percent after the Finnish handset maker signed a patent agreement with Qualcomm (QCOM.O: Quote, Profile, Research, Stock Buzz), ending three years of legal battles.

Some other earnings reports also impressed with Syngenta (SYNN.VX: Quote, Profile, Research, Stock Buzz) rising 4.7 percent as it raised its outlook for 2008 and 2009. (Editing by Greg Mahlich)

__________________
[SIZE="2"][/size]