* FTSEurofirst 300 down 0.3 pct
* Index fell last week to lowest level since mid-Dec 2014
* Broker upgrades lift Ericsson, LVMH and CNP
* But Casino falls on bearish S&P note (Adds quote, detail)
By Alistair Smout
LONDON, Jan 18 (Reuters) - Euro zone banks weighed on European stocks on Monday after news that the European Central Bank was scrutinising some non-performing loans, although oil and gas companies provided some support for the broader market.
The euro zone bank sector fell 3.8 percent, with traders citing news over the weekend that the ECB is quizzing a number of euro zone banks about non-performing loans as it ramps up efforts to tackle the region's mountain of bad debt.
Spain's Banco de Sabadell, France's Credit Agricole and Portugal's Banco Comercial Portugues slipped 5-8 percent.
Italy provided many of the sector's top fallers, with Banco Monte Paschi down 14.4 percent, and Banco Popolare , UniCredit and Mediobanca down 4.7-6.6 percent.
Italian banks outperformed their peers last year, but brokers are starting to turn more negative on the sector.
Bank stocks weighed on the euro zone-only Euro STOXX 50 , which fell 0.6 percent, underperforming the pan-European FTSEurofirst 300, which fell 0.3 percent at 1,293.67.
"The uncertainty in the market, be it in Europe or wherever else, is causing these banks to suffer," Mark Foulds, sales trader at ETX Capital, said. The sector is also under pressure from the recent volatility over China, he added.
"When the markets fall like they have done, everyone feels on edge. The market is dire, and there's not the liquidity that there used to be, which can mean the market gets oversold."
The FTSEurofirst 300 touched its lowest level in more than a year, and some said the ECB might act to provide more stimulus when it meets later this week, given the 10 percent drop in European shares driven by weak oil prices and concerns over China.
"This week's ECB meeting might highlight that the ECB has some options available. We doubt that this will be sufficient to stop the downward pressure in the medium term," strategists at RBC said in a note.
Energy shares stabilised after a steep drop last session, up 0.5 percent, after both Brent and U.S. crude turned positive having hit their lowest levels since 2003 after sanctions on Iran were lifted.
Top climber overall was Adidas, up 5.5 percent, after it appointed Henkel's Kasper Rorsted as CEO. Henkel's shares fell 4.2 percent.
Mobile telecoms gear maker Ericsson rose 3.1 percent after Nordea Markets raised its rating on the stock to "buy", although French supermarket retailer Casino fell 9.2 percent after ratings agency Standard & Poor's threatened to downgrade its debt to junk status.
Today's European research round-up (Editing by Keith Weir and Sarah Young)