* FTSEurofirst 300 flat at 1,243.20
* ARM rallies as Apple unveils two new iPhones
* European index struggle to break three-month highs
* Fed tapering remains key concern
By David Brett
LONDON, Sept 11 (Reuters) - Chip designer ARM topped the list of European gainers early on Wednesday after its partner Apple unveiled two new iPhones while the receding threat of U.S. military action in Syria helped keep European shares near three-month highs.
The potential for an earnings boost from Apple's new iPhone was enough to raise chip designer ARM Holdings to the top of the FTSEurofirst 300 gainers list.
ARM rose 4.5 percent after its partner Apple unveiled two new iPhones, which use its own 64-bit processor, the A7, reportedly based on an ARM design. ARM licences its processor blueprints to chipmakers and receives royalties on every chip shipped. Analysts expect the new processor to result in a higher royalty rate to ARM compared to the current generation 32-bit processors.
Traders said a broader pick-up in earnings is needed to help support European indexes which are currently trading near long-term multiples on a forward 12-month price-to-earnings ratio of around 14.
"Europe has outperformed the U.S. recently, basically playing catch-up. The next leg up may come from expectations of higher earnings going forward," Jawaid Afsar, sales trader at SecurEquity, said.
European shares are back around highs hit in May and 10-year Treasury yields have added more than 100 basis points over that period as investors have priced in the potential impact of stimulus withdrawal in the United States. The robust performance of equities also reflects the strength of recent economic data.
The FTSEurofirst 300 was flat at 1,243.20, along with the broader STOXX 600 at 309.87 and the euro zone blue chip index at 2,850.87, by 0743 GMT.
Confidence among equity investors has also returned as the cost of oil has fallen in the wake of diminishing threats of U.S.-led military action against Syria. The VIX index, a crude gauge of investor fear, has declined 15 percent month-to-date.
There were further signs that prospects of an attack on Syria are receding after U.S. President Barack Obama pledged on Tuesday to explore Russia's plan for Syria to place its chemical weapons under international control and said he had asked Congress to postpone a vote on authorising military action.
But hurdles ahead in the form of stimulus withdrawal in the United States, which could derail a fragile global economic recovery, remain a threat to near-term momentum.
"Markets are expected to consolidate ahead of next week's Federal Reserve meeting (when it is expected the Fed will announce the start of a winding down of stimulus)," SecurEquity's Afsar said.
Peel Hunt's equity strategist Ian Williams said the consensus on the scale of the Fed's tapering now seems to be settling around a modest $10 billion reduction.
Indexes face short-term technical resistance. Germany's DAX failed again to close above August highs on Tuesday, while Britain's FTSE 100 showed fatigue around the big figure at 6,600.
Longer-term, however, the technical picture remained bullish for European shares.
"The STOXX 600 index is in a technical bull market. It was in a trend-confirming consolidation during the last month on expectations that it will break to the upside," Achim Matzke, strategist at Commerzbank, said, but added the index might face resistance at around 310-314, its high in May.
He said the Euro STOXX 50 could struggle to convincingly break the resistance level of 2,850, an area where it failed last month. "But our expectations are that it will be able to cross the level this time."