Commodities pull down European shares; UK defence stocks rise

* Pan-European FTSEurofirst 300 index down 0.3 pct

* Commodities, energy plays main fallers on demand worries

* UK defence stocks rise on military spending plans

* Italian lenders up after launch of rescue fund

* Bank of Ireland (EUREX: 1269463.EX - news) among top risers (Adds closing prices)

By Danilo Masoni and Alistair Smout

MILAN/LONDON, Nov 23 (Reuters) - European shares fell on Monday as slow demand dragged on commodities and energy stocks, but British defence plays such as Rolls Royce (LSE: RR.L - news) rose on plans to boost military spending.

The pan-European FTSEurofirst 300 was down 0.3 percent at 1,500.14, off its initial lows thanks to stronger than expected business surveys. The Euro STOXX 50 index was 0.2 percent lower.

Mining stocks fell 1 percent, a top sectoral faller, after metal prices dropped to multi-year lows on worries about Chinese demand, with a strong dollar also hindering prices.

Oil and gas shares were also put under pressure by weakness in the price of Brent crude, although they were down just 0.4 percent, off their lows after Saudi Arabia said it was willing to work with other oil producers to stabilise prices.

"It (Other OTC: ITGL - news) looks like we're going to be stuck in a glut for a while," Mike McCudden, head of retail derivatives at Interactive Investor (LSE: 0NC5.L - news) said, adding that the news from Saudi Arabia would not make much difference unless it was backed up with action.

"There are still concerns over Chinese growth and that's going to impact commodities and be a weight on European markets."

Rolls Royce and BAE Systems (LSE: BA.L - news) rose 3.1 and 1 percent respectively after finance minister George Osborne said Britain planned to buy more fighter jets and boost its anti-terrorism spending by 30 percent.

On Monday Prime Minister David Cameron said Britain would invest an additional 12 billion pounds ($18 billion) in defence equipment over the next 10 years, including nine Boeing submarine-hunting aircraft.

Italian lenders were among the top gainers in Europe, boosted by the launch of a new system to undertake a 3.6 billion euro ($3.8 billion) rescue of four small savings banks before stricter rules take effect next year.

Italy's FTSE MIB rose 0.7 percent, the only major European bourse in positive territory.

Although the cost of the rescue will be borne by Italy's healthy banks, a trader saw it as a positive resolution for the sector in the medium term.

Bank of Ireland rose 4.2 percent in strong volumes after it said it would redeem 1.3 billion euros ($1.4 billion) of preference shares on Jan. 4, 2016, the final step allowing it to resume dividend payments.

Ireland (Other OTC: IRLD - news) 's recovery from the financial crisis has been very different to Greece's, where banks are still under pressure. National Bank (NYSE: NBHC - news) of Greece fell nearly 30 percent to an all-time low.

The Greek banking sector was weighed down by deeply discounted share offerings from last week and an S&P report saying capital being raised would only be enough to absorb the losses they are expected to post over the next year.

Belgian shares fell 0.3 percent, broadly in line with the overall weaker market trend, as investors played down concerns of a Paris-style mass attack after Brussels was placed under a security lockdown at the weekend.

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

Asset performance in 2015: http://link.reuters.com/gap87v

Today's European research round-up RCH/EUROPE ($1 = 0.9414 euros) (Editing by Ruth Pitchford)