European shares fall 1 pct as bank woes grow

FRANKFURT, Oct 7 (Reuters) - European shares turned sharply negative early on Tuesday, having risen more than 2.5 percent in initial trading, as banks took a beating amid reports of additional funding needs.

At 0831 GMT, the FTSEurofirst 300 index of top European shares was down 1.2 percent at 993.09 points, having risen as much as 2.6 percent.

Banks were the top weighted losers on the index, with Royal Bank of Scotland (RBS.L: Quote, Profile, Research) down 33 percent on speculation that it was in talks for UK government funding, and Deutsche Bank (DBKGn.DE: Quote, Profile, Research) down 14 percent on talk of a capital increase, though a financial source dismissed the speculation.

The FTSEurofirst 300 fell 7.8 percent to a four-year-low close on Monday. (Reporting by Peter Starck)