Europe shares extend gains, led by banks

LONDON, July 23 (Reuters) - European stocks extended early gains in morning trade on Wednesday, up 1.6 percent as banks surged and a sliding oil prices soothed inflation fears.

Banks were the top gainers with HSBC (HSBA.L) rising 1.7 percent, Royal Bank of Scotland (RBS.L) up 6.7 percent and BNP Paribas (BNPP.PA) putting on 3.5 percent.

At 0836 GMT the pan-European FTSEurofirst 300 index .FTEU3 was up 1.6 percent at 1,183.94 points.

Inflation worries were calmed by oil prices falling more than $1 to below $127 a barrel.

Energy shares reversed earlier losses, with BP (BP.L) adding 0.3 percent, Shell (RDSa.L) putting on 0.9 percent and Total (TOTF.PA) gaining 0.5 percent. (Reporting by Rebekah Curtis)