Europe shares up for 7th day;Spanish auction helps

                                
 * FTSEurofirst 300 up 0.7 percent, ahead for seventh session
                                
 * BP surges after agrees $20 billion oil spill fund
                                
 * Results of Spanish debt auction reassure investors
                                
 * For up-to-the minute market news, click on [STXNEWS/EU]
By Joanne Frearson
                                
 LONDON, June 17 (Reuters) - European shares were higher at
midday on Thursday for the seventh session in a row to a near
five-week high, after a key Spanish bond auction eased fears
over the euro zone debt crisis and boosted banking shares.
                                
 Oil company BP <BP.L> jumped 7.7 percent after saying it
would set up a $20 billion fund for damage claims from its Gulf
of Mexico oil spill, sell assets and suspend dividend payments,
removing uncertainty over the size of the fund. [ID:nN15112656]
                                
 The stock was still down 45 percent since the oil spill
started in mid-April.
                                
 By 0938 GMT, the pan-European FTSEurofirst 300 <.FTEU3>
index of top shares was up 0.7 percent at 1,046.95 points after
falling to as low as 1,034.74 early on. The index is still down
5.9 percent from a mid-April peak, pulled by concerns about the
euro zone debt crisis.
                                
 Spain sold just under its target amount of 3.5 billion euros
($4.3billion) of 10 and 30-year government bonds on Thursday, in
an auction analysts said went well after the bonds cheapened
considerably ahead of the sale. [ID:nLDE65F1TJ]
                                
 Banks reversed early losses and gained ground. Spanish banks
Banco Santander <SAN.MC> and BBVA <BBVA.MC> were up 1.3 percent
and 1.4 percent respectively.
                                
 British banks Lloyds Banking Group <LLOY.L> and Barclays
<BARC.L> rose 3.9 percent and 3 percent respectively.
                                
 Finance minister George Osborne announced the biggest
shake-up  of the regulatory landscape in 13 years on Wednesday,
saying he was to give the Bank of England ultimate control over
financial supervision. [ID:nLDE65F1OM]
                                
 "We have seen some resolution from the European politicians,
even though the problems are not going away they are conveying
the impression that they are going to do something about it,"
said David Buik, senior partner at BGC partners.
                                
 "When the markets have been out of confidence that is what
they want to see."
                                
 Spain's economy minister, Elena Salgado, said Spain will
publish bank stress test results bank by bank and may use as
much as 30 billion euros of its Fund for Orderly Bank
Restructuring (FROB) to cover the financing needs of its banks.
                                
 Elsewhere, France's economy minister said the country backed
publication of bank stress test results to dispel financial
market suspicion.
                                
 European Union leaders began talks on Thursday on ways to
strengthen budget discipline and economic policy coordination,
hoping to show financial markets they can see off a euro zone
debt crisis.
                                
 
                                
 UBS RISES
                                
 UBS <UBSN.VX> rose 1.9 percent. Switzerland's parliament
backed a Swiss-U.S. tax treaty crucial to the future of UBS
<UBSN.VX>, laying to rest months of uncertainty over the deal
and paving the way for renewed recovery at the Swiss bank.
                                
Across Europe, the FTSE 100 <.FTSE> index was up 1 percent,
Germany's DAX <.GDAXI> was 0.6 percent higher and France's CAC
40 <.FCHI> gained 1 percent.
                                
 The Thomson Reuters Peripheral Eurozone Countries Index
<.TRXFLDPIPU> rose 1.1 percent.
 (Reporting by Joanne Frearson; Editing by Dan Lalor)
 ($1 = 0.8154 euro)