LONDON, March 4 (Reuters) - After a positive start in early trading, European stock markets fell back by mid-morning on Tuesday as a rally in bank shares petered out and automakers’ shares fell following Peugeot's downward revision to the outlook for the European car market.

By 1000 GMT the FTSEurofirst 300 index of top European shares was flat at 1,298.25 points, having fallen by as much as 0.2 percent to a session low of 1,295.94.

HSBC led declines among European banks falling 1.7 percent, while Commerzbank lost 2.4 percent and UBS fell 1.3 percent.

Auto shares were among some of the worst performing sectors. Peugeot fell 4.6 percent after chief executive Christian Streiff said the French company now saw the European market flat, compared to expectations six months ago for a flat to higher market.

Italy's Fiat lost 4.4 percent, BMW declined by 2.3% and France's Renault lost 2.6 percent.

Among gainers was German utlity E.ON, which rallied 2.3 percent, partly recovering from a 7% loss.