Europe shares end higher for 3rd day; financials up

* FTSEurofirst 300 ends 0.6 pct higher; 3rd day of gains

* Financials, retailers among top gainers

* Pharmaceuticals, miners slip

By Atul Prakash

LONDON, May 27 (Reuters) - European equities finished higher for a third straight session on Wednesday, boosted by financial and retail shares, on hopes the market has seen its worst for the year and is on track for a recovery.

The FTSEurofirst 300 of top European shares ended 0.6 percent higher at 870.63 points. The index, which slumped 45 percent in 2008, has gained in eight of past 10 sessions and is up 35 percent from a lifetime low hit in early March.

Banks added most points to the index, with HSBC (HSBA.L: Quote, Profile, Research) rising 2 percent, Societe Generale (SOGN.PA: Quote, Profile, Research) up 1.8 percent, Credit Agricole (CAGR.PA: Quote, Profile, Research) advancing 3 percent and UBS (UBSN.VX: Quote, Profile, Research) gaining 1.7 percent.

"There is an increase in optimism in terms of some of the economic indicators that we have been seeing and the market is no longer pricing in the prospect of a further depression scenario," said Henk Potts, equity strategist at Barclays Stockbrokers.

"Confidence has risen quite significantly, not only at the consumer level but also at the business level, helped by a stabilisation of the financial sector," he added.