* Pan-European index down 1.9 pct
* Markets extend losses after weak U.S. service data
* Syngenta rises after agreeing on ChemChina bid
* Fortum, KPN fall after weak earnings
* Italian lenders lead bank sector lower (Updates prices, adds details)
By Sudip Kar-Gupta and Danilo Masoni
LONDON/MILAN, Feb 3 (Reuters) - European shares fell on Wednesday as weak earnings from some leading companies weighed on markets, although Syngenta surged after ChemChina agreed a bid for the Swiss seeds and pesticides group.
Markets extended losses after a report in the United States said the service sector in the world’s largest economy slowed more than expected in January, even though it still expanded.
The pan-European FTSEurofirst 300 index, which slid 2 percent on Tuesday, was down by 1.9 percent by 1525 GMT. The euro zone’s blue-chip Euro STOXX 50 index retreated by 2.4 percent.
“Sentiment has weakened materially and is being undermined by mounting worries over global economic growth spanning from China to the U.S., where initial signs of a possible recession are starting to emerge,” said JCI analyst Emanuele Rigamonti.
“We expect markets to trade mostly sideways until the March ECB meeting, which once again might turn out to be a catalyst for a relief rally,” he added.
Finnish state-controlled utility Fortum slumped 13 percent after posting fourth-quarter earnings dropped more expected. Dutch telecoms group KPN also fell, by 1.5 percent, after reporting worse-than-expected core earnings.
However, Syngenta rose 3 percent after China’s state-owned group ChemChina agreed to buy the Swiss company for $43 billion, the largest overseas acquisition by a Chinese company. Syngenta, however, remained below the agreed price with some brokers saying the deal carried high execution risks.
“There are still risks for the deal which might delay the takeover process,” Baader Bank said in a note, citing political headwinds in Switzerland and possible moves by competitors to make the takeover more difficult.
Luxury goods group LVMH also climbed 4 percent after reporting fourth-quarter sales grew more than expected, but watch-maker Swatch tumbled after it reported lower profits and sales.
Of the companies on the European STOXX 600 index that have reported earnings so far, 57 percent have beaten or met market expectations and 43 have missed, according to data from Thomson Reuters StarMine.
“It’s been a very mixed bag on the earnings front. Personally, I think a lot of them have been quite disappointing,” said Terry Torrison, managing director at Monaco-based McLaren Securities.
Banks declined 4.3 percent, making them the top sectoral faller with Italian lenders leading the way on uncertainty over Rome’s plans to help them offload bad loans and after analysts at Citigroup issued a downbeat note.
Shares in Italy’s Monte dei Paschi, Popolare di Milano, UBI and Banco Popolare were all down by between 8.5 and 11.4 percent.
The FTSEurofirst has lost about 10 percent this year. World stock markets in general have been hit by signs of a slowdown in China, the world’s second-biggest economy and a major consumer of oil and metals.
Today’s European research round-up (Editing by Alison Williams)