* Live markets: cpurl://apps.cp./cms/?pageId=livemarkets
* Pan-European STOXX index up 0.3 percent at close
* Miners underpin market, set to gain 62 pct in 2016
* FTSE 100 posts record closing level
* Italian lenders Banco Popolare and Pop Milano under pressure (Adds detail, updates with closing prices)
By Kit Rees and Danilo Masoni
LONDON, Dec 28 (Reuters) - European shares inched up in quiet festive trade on Wednesday, with stronger mining stocks underpinning the broader market and helping Britain's FTSE 100 to a record closing level.
The STOXX Europe 600 closed 0.3 percent higher, while the FTSE, which reopened on Wednesday after the Christmas break, was up 0.5 percent by the close at its highest ever closing level of 7,106.08 points.
The FTSE outperformed its European peers thanks to the index's heavy exposure to mining stocks.
The Basic Resources STOXX index led sectoral gainers with a rise of 3 percent on the back of firmer metals prices. The index is on track to end the year with a gain of about 62 percent, helped by a recovery in commodities prices, better balance sheets and expectations of monetary stimulus in the United States.
Miners BHP Billiton and Anglo American rose 4.3 percent and 3.6 percent respectively. Precious metals miners Fresnillo, Randgold Resources and Centamin were also in demand as gold prices extended gains.
"The yellow metal is in demand and could be set for a successful test above the $1,150 resistance," London Capital Group analyst Ipek Ozkardeskaya said in a note.
Merger partners Banco Popolare and Banca Popolare di Milano were among the biggest STOXX losers, down 2.2 percent and 2.7 percent respectively. One Milan-based trader said the stocks were hit by concerns over coverage levels for bad loans.
Airlines and aircraft manufacturers were also in focus, with shares in Airbus down 0.3 percent after the company postponed deliveries of a dozen A380 planes to Emirates Airline. International Consolidated Airlines and Deutsche Lufthansa both fell more than 2.5 percent.
Spanish airport operator Aena was down 1.8 percent after online newspaper El Confidencial reported that the company would be forced to cut tariffs it applies to airlines by 2 percent a year in the 2017-2021 period.
Outside the STOXX , Britain's Bovis Homes dropped 5.3 percent after saying it would not deliver the number of houses it originally expected in 2016, with profit likely to fall below market forecasts.
Price moves in other sectoral indexes were small - between a gains and falls of about 1 percent - in muted trading.
Turnover on the STOXX index dropped to 13.3 billion euros on Wednesday, compared with an average of 26.7 billion euros over the past month. The pan-European index is set to end the year with a fall of 1.2 percent. (Editing by David Goodman)