* Lisbon's PSI 20 sinks 2.2 pct on Espirito Santo family debt worries
* FTSEurofirst 300 down 0.2 pct, Euro STOXX 50 up 0.2 pct
* Sodexo hit after poor update (Recasts with Portugal lagging)
By Francesco Canepa
LONDON, July 9 (Reuters) - Portuguese shares lagged European markets on Wednesday, hit by concerns about the financial health of one of the country's largest financial groups.
Lisbon's PSI index fell 2.2 percent, led by an 11 percent fall in Espirito Santo Financial Group (ESFG), the largest shareholder of Portugal's largest listed bank, Banco Espirito Santo.
Business daily Diario Economico reported on Wednesday Portugal's Espirito Santo banking family, who control ESFG, is set to propose to creditors an extension of the maturities of the debts issued by its Luxembourg-registered holding company.
The PSI, which has risen 24 percent in the past 12 months, has underperformed other European markets since concerns surrounding Espirito Santo arose as well as after some disappointing economic data came out last month.
"Investors are starting to wake up to this bad coffee," Franz Wenzel, chief strategist at AXA Investment Managers, said. "Also they've made fairly decent returns (on Portuguese shares) so why not taking profit and take some shelter."
The pan-European FTSEurofirst 300 index, which hit a 6-1/2 year high in late June, was down 0.2 percent at 1,361.08 points.
The euro zone's blue-chip Euro STOXX 50 index, meanwhile, was up 0.2 percent, recovering some ground after a 1.4 percent fall in the previous session.
A disappointing trading update from French caterer Sodexo , coming hard on the heels of a profit warning from Air France-KLM on Tuesday, fuelled concerns about weak corporate earnings ahead of the second-quarter reporting season.
Sodexo saw its shares fall 1.4 percent after it said its fourth quarter would be weaker than expected due to the delayed start-up of some major contracts. The group cut its full-year sales growth goal.
"There are some worries that some company results may not be as strong as expected," said Berkeley Futures associate director Richard Griffiths.
$1 = 0.5877 British Pounds Editing by Lionel Laurent/Jeremy Gaunt