European shares fall as banking and energy stocks decline

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* Banking and energy shares fall

* Lanxess (LSE: 0H7I.L - news) surges after announcing Chemtura (Euronext: CHMT.NX - news) acquisition

* K+S shares fall after Deutsche Bank (LSE: 0H7D.L - news) downgrade

* Clinton vs Trump TV debate due later

By Sudip Kar-Gupta

LONDON, Sept 26 (Reuters) - European stocks fell on Monday, weighed down by a pullback in the shares of major banking and energy companies.

The pan-European STOXX 600 index fell 1.4 percent. The index remains down by around 7 percent since the start of 2016.

The STOXX Europe 600 Banking index fell 2.5 percent, with British bank Lloyds declining by 2.8 percent after Goldman Sachs (NYSE: GS-PB - news) cut its rating on Lloyds to "sell" from "neutral".

The broader European banking index remains down by around 20 percent since the start of 2016 - the worst-performing equity sector in Europe this year - as the industry has been impacted by concerns that negative interest rates will hit the profitability of banks.

"Banks are still in bad shape," said Rupert Baker, a European equity sales executive at Mirabaud Securities.

Baker added he expected European stock markets to make little progress until the result of November's U.S. Presidential election was known, with Democrat candidate Hillary Clinton and Republican rival Donald Trump due to square off in their first televised debate later on Monday.

"We're not really going to go anywhere on European markets until the November election," said Baker.

The STOXX Europe 600 Oil & Gas index also fell 2.1 percent, reflecting a sharp drop in oil prices in recent sessions.

Among other individual stock movers, Lanxess (Amsterdam: LX6.AS - news) surged 7.9 percent as investors welcomed its move to buy specialty chemical company Chemtura for about $2.1 billion in cash.

"CEO Matthias Zachert has a very good track record with acquisitions so far and Chemtura seems to be another good one," said DZ Bank analyst Peter Spengler.

Shares (Berlin: DI6.BE - news) in fertiliser company K+S fell 4.7 percent after Deutsche Bank cut its rating on the stock to "sell" from "hold". (Editing by Andrew Heavens)