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European shares fall on US concerns, Schneider hit by downgrade

* FTSEurofirst 300 falls 0.4 pct, Euro STOXX 50 down 0.6 pct

* Schneider hit by Exane BNP Paribas downgrade

* U.S debt issues weigh on market in near-term

* Most investors see October equity dip as short-lived

By Sudip Kar-Gupta

LONDON, Oct 3 (Reuters) - European shares dipped on Thursday as doubts over how the United States will resolve a budget standoff that has shut down parts of the government took their toll, while Schneider Electric was hit by a broker downgrade.

The euro zone's blue-chip Euro STOXX 50 index closed down by 0.6 percent at 2,902.12 points, while the broader pan-European FTSEurofirst 300 index fell 0.4 percent to 1,242.18 points.

A 3.2 percent fall at Schneider took the most points off the FTSEurofirst 300 index, as Exane BNP Paribas's downgrade to "neutral" from "outperform" hit the company's shares.

The FTSEurofirst 300 hit a fresh 5-year high of 1,274.59 points in late September, while the Euro STOXX 50 hit a 2-year high of 2,955.47 points.

Both markets have risen around 10 percent since the start of 2013 but have slipped back in October after the U.S. government had to partially shut down this week due to disagreement among politicians over the country's budget.

The standoff is leading to concerns about the $16.7 trillion U.S. debt ceiling, which Treasury Secretary Jack Lew has said the government will hit no later than Oct. 17.

Darren Courtney-Cook, head of trading at Central Markets Investment Management, expected the uncertainty over the U.S. debt situation to weigh on markets this month.

He sold a position on Germany's DAX, which fell 0.4 percent to 8,597.91 points, at 8,634 points on Thursday.

"I've been trading the range, buying the dip and selling the top. But I'm looking to leave myself positioned 'short'," he said.

Others were more positive on a longer time frame, arguing that in the past the United States had always managed to reach last-minute solutions to raise its debt ceiling and that signs of a global economic recovery would continue to lift equities.

Economic data on Thursday showed a return to growth last month for French and Italian companies, along with growth in Britain and Germany.

Threadneedle Investments chief investment officer Mark Burgess said his firm had raised its position on European equities to "neutral" from "underweight".

Goldman Sachs economics analyst Noah Weisberger also felt any equity market dip caused by the U.S debt situation would be relatively short-lived.

"The current data, our forward views and a simple look back at past government shutdowns all suggest that current concerns will likely be short-lived," he said.