* FTSEurofirst 300 falls 0.8 pct to 1,290.62 points
* Euro STOXX 50 closes down 0.5 pct at 3,014.62 points
* Energy sector hit after BG warns over production
* Vodafone falls as AT&T says no plans to bid for company
* No need to panic - OMGI's Kevin Lilley
LONDON, Jan 27 (Reuters) - European shares fell to their lowest level in more than a month on Monday, led by drops in major telecoms and energy stocks.
The downward move extended last week's decline, which was triggered by concerns about emerging markets and the pace of growth in China. Weak corporate earnings in Europe have also helped to knock European stock markets off multi-year highs.
The pan-European FTSEurofirst 300 index closed down by 0.8 percent at 1,290.62 points, its lowest level in more than a month. The euro zone's blue-chip Euro STOXX 50 index fell 0.5 percent to 3,014.62 points.
Telecoms and energy were the worst-performing European sectors. The STOXX Europe 600 Oil & Gas Index fell 2.3 percent as BG slumped 13.8 percent after the company warned production would fall short of forecasts.
The STOXX Europe 600 Telecoms Index fell 1.5 percent, with Vodafone dropping after U.S. telecoms company AT&T said it was not planning to make an takeover bid for the UK mobile-service operator.
Traders and investors said European markets may lose more ground in the coming month. One fund manager expected a further 1 percent fall in the pan-European STOXX 600 index, but added the longer-term picture remained more robust as Europe's economic recovery slowly gathers momentum.
"We continue to think the equity market will trend higher, but there is a higher risk of a short-term setback," said Goldman Sachs chief global equity strategist Peter Oppenheimer.
"SLOW EUROPEAN RECOVERY"
European stocks suffered their biggest one-day fall in seven months on Friday, when the FTSEurofirst 300 shed 2.4 percent and Spain's IBEX dropped 3.6 percent on concern about economies and currencies in Latin America.
Emerging markets were hit hard last week, with Argentina knocked by a devaluation in its peso currency while Ukraine has been rocked by political turmoil.
Kevin Lilley, the head of European equities at Old Mutual Global Investors, said emerging markets' problems and concern about weak corporate earnings could push the STOXX 600 index down another 1 percent to around 319 points. However, Lilley said the longer-term picture for 2014 in western Europe was more encouraging.
The Bundesbank said on Monday that growth in Germany - Europe's largest economy - would accelerate in the first quarter, and Lilley backed Germany's DAX, which hit record highs earlier this year, as his favourite European market.
"I'm not panicking," Lilley said. "The issues with Argentina and Ukraine seem quite specific to those countries, but in Europe itself, the economic data is telling us that we're still in this slow rebound and recovery mode."