EADS, miners lift Europe shares; UK banks lag

                                
 By Sitaraman Shankar
                                
 LONDON, May 14 (Reuters) - European shares rose on Wednesday
as takeover talk boosted miners and strong results powered
aerospace and defence group EADS <EAD.PA>, while concern over
the need for more rights issues hit British banks.
                                
 At 0813 GMT, the FTSEurofirst 300 <.FTEU3> index of top
European shares was up 0.6 percent at 1,354 points.
                                
 EADS <EAD.PA> jumped 7 percent after first-quarter profit
beat expectations and the company confirmed its forecasts for
the year, and miners were led higher by BHP Billiton <BLT.L>,
which gained 4.4 percent on talk of Chinese stakebuilding.
                                
 Xstrata <XTA.L> was up 2.5 percent and Rio Tinto <RIO.L> up
1.9 percent.
                                
 Telekom Austria <TELA.VI> and Italian utility Enel <ENEI.MI>
also advanced after posting strong results, rising more than 3
percent to rank among the top European gainers.
                                
 Analysts said that while the result season had been
reasonably strong, there could be weakness ahead.
                                
 "Cost pressures are at very elevated levels at the moment,
and we will see some disappointments in operating margins in the
second half of the year," said Darren Winder, strategist at
Cazenove.
                                
 "There are signs that the Fed easing is coming to an end and
inflation in Europe has been an obstacle ... interest rate
forecasts out there may be too demanding," he said.
                                
 Across Europe, weak banks limited Britain's FTSE <.FTSE> to
a 0.2 percent gain, underperforming Germany's DAX <.GDAXI>,
which rose 0.3 percent, while France's CAC <.FCHI> rose 0.7
percent, powered by EADS and bank BNP Paribas <BNPP.PA>.
                                
 British stocks trailed their European rivals on Tuesday due
to higher inflation figures than expected, and sterling hit a
three-month low against the dollar on Wednesday. The Bank of
England's quarterly inflation report is due at 0930 GMT and may
signal a reduced chance for more interest rate cuts.
                                
 
                                
 RIGHTS ISSUE PROSPECTS WEIGH
                                
 Banks were mixed, with BNP Paribas rising 2 percent after
its quarterly profits beat analysts' forecasts, UBS <UBSN.VX> up
1 percent and UniCredit <CRDI.MI> gaining 1.6 percent but
British lenders led lower by Bradford & Bingley <BB.L>, which
slid 9 percent after unveiling a rights issue.
                                
 Analysts said that more British banks may be forced to
bolster their capital position, and stock in Barclays <BARC.L>,
Alliance & Leicester <ALLL.L>, Lloyds TSB <LLOY.L> and HBOS
<HBOS.L> fell between 1 and 4 percent.
                                
 The FTSEurofirst 300 has risen 1.2 percent so far this
month, following a 6 percent rise in April, but is still 17
percent off 6-1/2 year highs hit in July last year.
                                
 The index has been taken lower by big bank writedowns linked
to credit market problems, and shares are sensitive to any signs
of balance-sheet damage.
                                
 Investor focus will shift later to U.S. inflation data at
1230 GMT, which may give investors an idea of how much scope the
Federal Reserve has to lower U.S. rates after cutting rates by
225 basis points so far this year.
                                
 "There's quite a lot to digest, and scope to be cautious,"
said Cazenove's Winder.
 (Editing by Quentin Bryar)