European shares dip on talk of October move by Fed

* FTSEurofirst 300 down 3.04 points at 1,259.57

* Fed's Bullard talks of potential October stimulus cutback

* National Grid (LSE: NG.L - news) leads utilities lower after UBS (Berlin: UBRA.BE - news) downgrade

* Merkel election win keep Dax (Xetra: ^GDAXI - news) near all-time highs

By David Brett

LONDON, Sept 23 (Reuters) - Hawkish comments from St Louis Federal Reserve President James Bullard dragged back European shares early on Monday, while a landslide victory in German elections for Angela Merkel kept the DAX around all-time highs.

By 0715 GMT, the FTSEurofirst 300 was down 3.04 points or 0.3 percent at 1,259.57, tracking a late sell-off in the U.S. on Friday after Bullard dulled euphoria at the Fed's decision to delay withdrawing its monetary stimulus. He said they could begin to rein in bond-buying in October if data allowed.

Most European indexes hit multi-year highs after the Fed surprised investors by sticking fully with its current stimulus programme last Wednesday, but with more Fed members expected to speak today traders said performance could be choppy.

"We appear to be back to interpreting kites flown by FOMC members and to dependency on monthly data that is notoriously prone to drastic revision," Alastair Winter, chief economist at Daniel Stewart & Co, said.

"Until there is more clarity, most markets are going to remain unsettled, including those that are usually thought to benefit from QE's continuation. It is far from clear what data will be good enough to slow the printing presses."

Leading the fallers on Monday were utilities, led lower by the UK-listed National Grid after a downgrade by UBS to "neutral" from "buy" on valuation grounds.

Commodity-related shares also faltered, having been among the strongest gainers in the last 3-months, despite better-than-expected manufacturing data from China, which showed the country's factory sector grew at its fastest pace in six months in September.

Analysts at Citigroup (NYSE: C - news) cast doubt over the outlook for the sector, saying: "The improvement in China's industrial indicators is likely to be short-lived given tight credit and as industrial numbers have been flattered by strong electricity (cooling demand in response to record heat) and steel production (overproduction being pushed onto international markets)."

Miners are also acutely exposed to any talk of money being withdrawn from the economy by central banks.

Germany's DAX slipped 0.3 percent to 8,653.89 but still traded near its all-time closing high of 8,694.18 after Angela Merkel won a landslide personal victory in Germany's election.

However, Merkel's conservatives appeared just short of the votes needed to rule on their own and may have to convince leftist rivals to join a coalition government.

"If (Sunday's) election result points to a CDU/CSU and SPD coalition, which looks most likely at the current juncture, we think it will be taken positively by most investors," UBS analysts said in a note.