European shares slip on weaker financials, miners

(Adds final prices)

* Pan-European index down 0.04 pct, euro zone index down 0.2pct

* Deutsche Bank, Barclays fall after updates

* Nokia surges after strong results

* Telecom Italia rallies on stake purchase

By Danilo Masoni and Atul Prakash

MILAN/LONDON, Oct 29 (Reuters) - European shares fellslightly on Thursday, with banking stocks leading the way afterdisappointing updates from Deutsche Bank and Barclays, whileinvestors assessed the negative impact of a U.S. rate hike byyear-end.

The pan-European FTSEurofirst 300 index ended down0.04 percent, while the euro zone's blue-chip Euro STOXX 50index fell 0.23 percent.

The U.S. Federal Reserve kept interest rates unchanged onWednesday but left the door open to a rate hike in December,playing down recent turmoil in global financial markets.

"European investors are taking profit on risky assets asthey start to gauge the end-effect of a rate increase," JCICapital analyst Emanuele Rigamonti said.

Shares in Deutsche Bank fell 6.8 percent afterGermany's biggest lender warned of two tough years of dividendcuts, pay restraint and thousands of job cuts.

"Deutsche Bank is cutting its dividend and the story for thebanking sector as a whole is that they are going to struggle toget back to their earlier levels of profitability, given theamount of regulation going on," Clairinvest fund managerIon-Marc Valahu said.

British bank Barclays dropped 6.3 percent followinga 10-percent drop in quarterly profits. Saint-Gobain fell 4.9 percent after saying its results were hit by acontraction in France.

Mining stocks fell 1.9 percent, the biggest declinein Europe, as metals prices extended losses. BHP Billiton, Glencore and Anglo American were alldown more than 4 percent.

But there were strong gains in the TMT sector.

The network equipment maker Nokia surged 10percent after reporting stronger-than-expected quarterly profitsas growth in China offset weaker demand in other key markets.

Nokia said it would return money to shareholders afteracquiring Alcatel-Lucent which also rose, by 10percent, as its profitability improved even though it posted anet loss in the third quarter.

Telecom Italia soared 8.7 percent after Frenchtycoon Xavier Niel built a minority stake, setting up apotential power struggle with largest shareholder Vivendi over the Italian phone group's future.

Danone rose 1.5 percent after China said it wouldease family planning restrictions to allow couples to have twochildren. The company is one of the world's largestmanufacturers of baby food and formula milk.

Today's European research round-up (Additional reporting by Sudip Kar-Gupta; Editing by GarethJones)