European firms tap into retail investor bond rush

* Retail investors catch corporate bond fever

* A new source of funds for companies

* Search for "yield" drives retail investor demand

By Jane Merriman

LONDON, July 3 (Reuters) - King of Shaves, a British shaving products firm, has invited customers to invest in a 5 million pounds ($8.21 million) bond, showing companies are capitalising on a surge in retail investor demand for such fixed income assets.

Institutional investors have already gobbled up some 200 billion euros ($280.4 billion) of corporate bonds issued in the first half of the year and now retail investors have worked up an appetite too.

King of Shaves' bond is tiny, but a string of big European companies, including oil company BP (BP.L: Quote, Profile, Research), car maker Volkswagen (VOWG.DE: Quote, Profile, Research), Italian oil company ENI (ENI.MI: Quote, Profile, Research) and France's EDF (EDF.PA: Quote, Profile, Research) have issued several billions of euros in bonds, partly aimed at small investors and more issues of this kind are expected.

BP's 500 million pounds bond last month, for example, saw strong retail investor demand.