European shares fall as US data casts pall over valuations

* FTSEurofirst 300 down 0.9 percent

* US data complicates earnings outlook

* Miners, telecoms fall as brokers cut forecasts

* RBS leads banks lower on compensation claim

LONDON, April 3 (Reuters) - European shares closed lower on Wednesday as weak U.S. data heightened worries that the global economy's growth prospects will struggle to justify recent stock market gains. The FTSEurofirst 300 fell 0.9 percent to 1,193.30, and the broader STOXX Europe 600 shed 0.9 percent to 294.80, eroding sharp gains from the previous session that had taken European shares back towards pre-credit crisis highs. The rally over the last nine months, supported by stimulus measures from central banks, has seen European shares re-rate on a price-to-earnings basis of 12.3 times, above the historical average of 12.19 times, Datastream data showed. A U.S. jobs report that showed less-than-expected hirings in the private sector in March, and a services sector index that missed expectations cast a pall over the growth model that is needed to support the market's view of future earnings.

"(In) the short term, the recovery in the global economy has already been priced in by the market and there's a bit of overshoot," Frederic Rollin, strategist at Pictet Asset Management, which has 46 billion euros ($59.06 billion) in equities under management, said. "Stocks were cheap a few months ago, but after the sharp ...rally, they're not cheap anymore," he said. Miners and telecoms were the steepest fallers, down 2 percent and 2.1 percent respectively as investment banks cut their earnings forecasts across both sectors. Credit Suisse cut its target prices and earnings estimates for miners, saying softer-than-expected demand had refocused attention on supply growth, particularly for iron ore and copper. It said it sees a downside risk to metal prices in the second-half 2013. The bank said the investment backdrop was challenging in the short term and made its largest earnings cuts to Anglo American , Antofagasta and Kazakhmys which fell between 1.4 and 5 percent.

RIO ROILED Rio Tinto shed 2 percent to 3,044 pence on reports that it hired Deutsche Bank to help sell Australian coal assets worth billions of dollars. "The mining sector supercycle has ended," Richard Curr, head of dealing at Prime Markets, says in a trading note. "With the rate of growth in China still in question, mining giants such as Rio Tinto are looking particularly vulnerable, hence the asset sales and rush to cut costs." He said Rio's activities were starting to resemble a "fire sale", which has prompted a fall in its share price below a technical support corresponding to their 200-day moving average, adding a retest of the year lows at 2,649 pence was looking increasingly likely. Miners have lagged the broader equity market by around 18 percent in 2013. Telecoms were hit by a bearish note by UBS, which warned about weaker-than-expected revenues this year and further dividend cuts, also due to the high level of debt. France Telecom, Telecom Italia and TeliaSonera, which were all downgraded to "sell" by UBS, fell between 1.1 percent and 5.4 percent. Heavyweight Vodafone fell 3 percent after its U.S. partner Verizon denied reports of a joint bid for the UK firm with AT&T, denting expectations that had helped the shares rise nearly 14 percent since early March. Concerns about the economic outlook also hit banks, which fell 1.8 percent. Royal Bank of Scotland slid 4.4 percent as investors launched a compensation claim against the UK lender related to a 12 billion pound rights issue in 2008. But share market losses will likely be capped by central banks stimulus. "The world is sitting on truckloads of cash, from which investors get zero yield, so globally the momentum in investment flows will continue to support risky assets," Pascal Blanque, chief investment officer at Amundi, which has 750 billion euros ($962 billion) in assets under management, said. "However, the rotation in Europe, from credit into equities and, within equities, from banks to cyclical stocks, has stalled ... Europe continues to disappoint, stuck in recession and deflation, so the upside potential for European equities is quite limited at this point."