* FTSEurofirst 300 off 1.4 pct
* Russian troops gather near Ukraine border
* DAX hit; German industrial orders slide
* Italy slips back into recession, FTSE MIB sharply lower
* Reinsurers weaken after results
By Tricia Wright
LONDON, Aug 6 (Reuters) - A ratcheting up of tensions in Ukraine and concerns about the strength of Europe's economic recovery combined to knock European shares back onto a steep downward path on Wednesday.
The FTSEurofirst 300 was down 1.4 percent at 1,316.28 points by 1100 GMT, its lowest level since mid-April, on reports of a build-up of Russian troops near the border with Ukraine, and also on evidence that the crisis there was affecting Germany, Europe's largest economy.
German industrial orders slid in June at their steepest rate since September 2011 as geopolitical risks made firms cautious and euro zone demand fell.
"Those German factory order numbers were just horrible. It really does just feed into the narrative that Europe is slowing down," said Michael Hewson, chief market analyst at CMC Markets.
"I think equities are likely to remain on the back foot until such time as we get some form of clarity on exactly what's going to happen in Russia/Ukraine ... If you're a German company you're not going to want to start investing money against a backdrop of rising geopolitical concerns and a weak economy."
Russia has amassed around 20,000 combat-ready troops on Ukraine's eastern border and could use the pretext of a humanitarian or peace-keeping mission to invade, NATO said on Wednesday.
The German DAX, which is dominated by companies heavily dependent on Russian energy, fell 1.5 percent. The DAX is now down almost 10 percent since early July.
On Wednesday, volatility, a crude gauge of investor fear, rose 7.9 percent.
In further evidence that Europe's economic recovery is weak, Italy's economy unexpectedly slid back into recession in the second quarter as gross domestic product shrank 0.2 percent from the first three months of the year.
The FTSE MIB sank 2.5 percent.
Portugal's PSI 20 was one of the biggest regional laggards, down 3.6 percent, led by banks, with Millennium bcp , its largest listed lender, down 9.3 percent.
There are concerns that banks will have to foot the bill if Novo Banco, which was carved out of troubled BES Banco Espirito Santo, is sold off for less than the state injected via the country's bank resolution fund.
"When the Novo Banco is sold, the loan has to be repaid to the state. Who is going to pay if there is a loss? Certainly the bank resolution fund that is supported by banks. That is what is weighing on banks' shares today," said Joao de Deus, trader at DIF brokers.
Downbeat earnings reports also took their toll on the market on Wednesday.
Hannover Re fell 3.5 percent after the German reinsurer said its net profit rose 10 percent to 211.5 million euros ($283 million) in the second quarter, slightly less than expected, as premiums declined.
Fellow reinsurer Swiss Re also declined, by 3.1 percent, after missing profit expectations.
With two-thirds of STOXX Europe 600 companies having reported results, 44 percent have missed expectations, compared to just 26 percent of companies on the U.S. S&P 500 that have fallen short of estimates, according to Thomson Reuters StarMine data.
Europe bourses in 2014: http://link.reuters.com/pap87v
Asset performance in 2014: http://link.reuters.com/gap87v
Today's European research round-up (Additional reporting by Alistair Smout and Daniel Alvarenga; Editing by Gareth Jones)