LONDON, May 11 (Reuters) - European shares fell on Friday as uncertainty over Greece's political outlook, a huge loss from JPMorgan and mounting concerns over Spain's banking sector led to a sharp deterioration in market confidence.
The FTSEurofirst 300 was down 0.7 percent at 1,011.80 by 0714 GMT, led by banks after JPMorgan Chase & Co, in a shock disclosure, said it suffered a trading loss of at least $2 billion from a failed hedging strategy.
Spain's banking problems also loomed large in investors' minds, with UBS warning of "significant risks" to Spanish banks, sovereign debt and economy if Madrid's plan to shore up the country's lenders, due to be unveiled on Friday, disappoints.
"Big day for Greece, Spain, the Euro and the U.S. banking sector. Overnight news with even JPMorgan not able to control its traders will mean further regulation and lower profits," said Lex van Dam, hedge fund manager at Hampstead Capital, which manages $500 million of assets.
Uncertainty over the political outlook in Greece also hurt sentiment, with Greek Socialist leader Evangelos Venizelos due to meet conservative Antonis Samaras on Friday in a last-ditch attempt to form a government and avoid a repeat election.