* FTSEurofirst 300 <> flat up 0.2 pct
* Banks gain; Lloyds up on broker upgrade
* Axa falls as Asia-Pacific sale deal blocked
* Retailers fall after updates
* For up-to-the-minute market news, click on []
By Brian Gorman
LONDON, Sept 9 (Reuters) - European shares edged higher on
Thursday, with miners and banks up as an ECB member expressed
optimism on the economy, though gains were capped by weaker
retailers after gloomy updates.
The euro zone is on the brink of a sustainable recovery and
the European Central Bank is likely to discuss removing some
support measures at its December meeting, Governing Council
member Yves Mersch said on Thursday. []
At 0924 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.2 percent at 1,074.05 points, after
rising 1 percent to a four-month closing high in the previous
session.
The European benchmark had soared 62 percent between a
lifetime low in March 2009 and the end of the year. But it is up
less than 3 percent in 2010, as investors have worried about
European debt levels and the strength of the economic recovery.
"The big issue is whether the market can break out of the
range it's been in," said Bernard McAlinden, investment
strategist at NCB Stockbrokers in Dublin. "Equity markets are
getting used to the reality that economies are slowing quite
significantly. The question is how much growth is required now
to support equity markets."
Miners to gain included BHP Billiton <BLT.L>, Rio Tinto
<RIO.L> and Xstrata <XTA.L>, up between 1.2 and 2.4 percent.
The sector had been lower earlier as base metals fell
sharply, with markets down more than 2 percent on average, on
talk of a Chinese probe on funds, making zinc the big loser
after open interest dropped almost 10 percent, traders said.
[]
The heavyweight banking sector was among the gainers.
Lloyds Banking Group <LLOY.L> rose 2.1 percent, boosted by an
upgrade to "equal-weight" from "underweight" by Barclays
Capital, and as the company agreed to sell its stake in
housebuilder Crest Nicholson to U.S. investment company Varde.
Barclays <BARC.L> rose 1.9 percent, bouncing from recent
weakness.
Other banks to rise included BNP Paribas <BNPP.PA> and
Societe Generale <SOGN.PA>, up 1 and 0.9 percent respectively.
But French insurer Axa <AXAF.PA> fell 2 percent after
Australia's competition regulator blocked National Australia
Bank's <NAB.AX> $12 billion bid for AXA Asia Pacific <AXA.AX>
for a second time, dashing NAB's efforts to cement its dominance
in the world's fourth-largest wealth management market.
RETAILERS FALL
British retailers were lower after gloomy updates.
Shares in Home Retail <.HOME> fell 3.2 percent after
Britain's No. 1 household goods retailer forecast a 20 to 25
percent fall in first-half profit and a full-year outcome in the
bottom half of the current analyst range.
Wm Morrison Supermarkets <MRW.L>, Britain's fourth-biggest
grocer, fell 1.5 percent as new Chief Executive Dalton Philips
said he expected a tough market this year. []
HMV <HMV.L> slumped 10.9 percent after the music, books and
games retailer said its first-quarter sales had been hurt by the
soccer World Cup.
Across Europe, Britain's FTSE 100 <> was up 0.6
percent, Germany's DAX <> rose 0.1 and 0.3 percent
respectively.
German utilities, gainers earlier in the week on plans to
extend the lifespans of nuclear power plants, were lower.
E.ON <EONGn.DE> fell 1.5 percent after Morgan Stanley cut
its target price, with an "underweight" rating. RWE <RWEG.DE>
fell 1.6 percent.
The Bank of England looks set to keep interest rates at a
record low of 0.5 percent on Thursday -- and probably well into
next year -- to keep the recovery on track in the face of
austerity measures and a weakening U.S. economy. []
(Editing by Hans Peters)
