European shares retreat as Greek and telecoms stocks drop

* Athens' ATG index falls after rising 15 pct in past 2 days

* Shares (Berlin: DI6.BE - news) in Numericable, Bouygues (Other OTC: BOUYF - news) , Altice slump

* Bouygues rejects Altice offer for telecoms arm

* Europe bourses in 2015: http://link.reuters.com/pap87v

* Asset performance in 2015: http://link.reuters.com/gap87v (Updates prices)

By Sudip Kar-Gupta

LONDON, June 24 (Reuters) - European stock markets gave back some of the gains made earlier in the week as doubts returned on Wednesday over Greece's debt crisis and French telecoms shares slumped after Bouygues rejected a bid.

German business morale also weakened for a second straight month in June, a leading survey showed, suggesting concerns about Greece are hitting the mood in corporate boardrooms across Europe's largest economy.

The pan-European FTSEurofirst 300 index fell 0.3 percent, while the euro zone's blue-chip Euro STOXX 50 index dropped 0.5 percent.

Athens' benchmark ATG equity index, which had risen 15 percent in the past two days, fell 1.8 percent and the Greek bank index dropped 6.3 percent after a Greek official said Prime Minister Alexis Tsipras told associates that measures proposed by his government had not been accepted by creditors.

Greece's Syriza government had earlier expressed confidence that parliament would approve a debt deal with lenders, despite an angry reaction from some of its own lawmakers who accused it of caving in to pressure for more austerity.

French telecom stocks were among the worst performers, with Bouygues falling 8.8 percent after the conglomerate's rejection of an offer by Altice for its telecoms arm.

Altice slid 6.3 percent, while shares in Numericable-SFR - owned by Altice - also slumped 8.8 percent. Shares in French rivals Orange (Taiwan OTC: 4554.TWO - news) and Iliad also weakened by between about 3 percent and 7 percent.

Bouygues' decision to turn down Altice's offer followed opposition from French President Francois Hollande's Socialist government which had expressed concern over the deal, saying it could be bad for jobs, consumers and investment.

"Once you start getting politicians involved in the mix, these deals always become very difficult," Clairinvest fund manager Ion-Marc Valahu said.

The Athens' ATG is down about 6 percent since the start of 2015 but the FTSEurofirst remains up by about 16 percent, since economic stimulus measures from the European Central Bank (ECB) have cushioned the impact of Greece on European markets.

Some brokers and investors remain confident Greece will remain in the euro zone, despite persistent concerns over the country's debts.

Credit Suisse (NYSE: CS - news) strategists increased the size of their "overweight" position in European equities and were confident a deal could be reached on Greece.

"We continue to see a very high probability of a temporary deal. Deposit outflows have now reached levels where weaker Greek banks are running out of collateral, and hence Syriza will likely have to compromise," they wrote in a research note.

Today's European research round-up (Additional reporting by Alistair Smout; Editing by Alison Williams)