Europe shares benefit from oil but end off highs

By Amanda Cooper

LONDON, May 16 (Reuters) - European shares rose on Friday, fed by a rally in energy stocks as crude oil hit new record highs, although banks coming under pressure and U.S. consumer sentiment data knocked the market back from session peaks.

Crude oil futures CLc1 hitting a high just shy of $128 a barrel drove up the oil and gas sector in Europe, pushing up shares in Total (TOTF.PA: Quote, Profile, Research), BP (BP.L: Quote, Profile, Research) and Royal Dutch Shell (RDSa.AS: Quote, Profile, Research) by 1.5 to 2.5 percent, making them the three largest positive influences on the broader market.

Shares in the UK's biggest electricity producer, British Energy (BGY.L: Quote, Profile, Research), rose 5.2 percent after the company said it had received early stage takeover proposals.

Pharmaceuticals put on a strong performance, with France's Sanofi-Aventis (SASY.PA: Quote, Profile, Research) rising 2.2 percent after investors welcomed positive clinical trial results for its heart drug Multaq.

A decline in bank stocks took some of the lustre off the index, particularly as U.S. stocks slipped into the red.

The FTSEurofirst 300 index of top European shares rose 0.4 percent to 1,365.2 points, after earlier rising by as much as 1.2 percent to four-month highs. Data showing U.S. consumer confidence data hit its worst level in nearly 28 years stripped the market of many of the day's gains.

But the index still gained 1.5 percent this week, helped by fairly robust earnings as well as U.S. data that showed inflation moderating and consumer spending holding up.

"In general terms, the data specifically coming out of the United States has certainly been supportive, despite the fact that we had disappointing consumer confidence numbers today," said Barclays Stockbrokers strategist Henk Potts.