* STOXX 600 flat at close
* Rights issue helps Cobham, results boost Melrose, Subsea
* Engie leads utilities
* Disappointments from Capita, Travis Perkins weigh (Adds quotes and detail, updates prices at close)
By Kit Rees and Helen Reid
LONDON, March 2 (Reuters) - European shares paused for breath on Thursday after a strong rally in the previous session, though there were sharp gains from Britain's Melrose and Norway's Subsea after well-received results.
The pan-European STOXX 600 index ended flat, weighed down by falls among basic resources and banking stocks.
What has been a generally impressive European earnings season is moving into its latter stages.
"With 75 percent of companies having reported, STOXX 600 Q4 earnings per share are up 12.1 percent year on year, the strongest number since Q4 2013," Deutsche Bank analysts said.
Results supported British mid-cap engineering turnaround specialist Melrose Industries, which hit a record high, up 10.5 percent, after its full-year revenue more than tripled, helped by its acquisition of U.S. ventilation maker Nortek Industries.
Subsea 7, the Norwegian oil services company, was up 5.5 percent after it posted a fourth-quarter earnings beat and said it would pay a special dividend.
The firm had been a short-selling target, with 8.8 percent of it shares outstanding on loan according to IHS Markit, though this number diminished 10 percent in the past month.
Engie, the French gas and power company, led the top-gaining utilities sector, up 8.2 percent and marking its best day since late 2008 after it posted 2016 earnings in line with analysts' expectations.
British engineering firm Cobham, however, was the top gainer, jumping more than 13 percent after saying it would raise 500 million pounds ($614 million) in a rights issue to put the company on a stronger footing after a "deeply disappointing" 2016.
"The context for the rights issue is essentially the weak 2H16 operating cash conversion, something that appears to have been due to a sharp increase in working capital," Sandy Morris, equity analyst at Jefferies, said.
"In terms of trading, 2H16 may not have shown the hoped for improvement on 1H16, but our sense is that in 2H16 much of the Group still performed satisfactorily."
British outsourcing firm Capita sank to the bottom of the STOXX, down 9.1 percent after posting disappointing results and announcing its CEO's departure.
British housebuilder Travis Perkins was another top faller after it posted a decline in profit due to weak performance in its plumbing and heating business. (Reporting by Kit Rees and Helen Reid; editing by John Stonestreet)