European shares flat before inflation data, Credit Agricole firm
* FTSEurofirst 300 flat, Euro STOXX 50 up 0.1 percent
* Euro zone flash inflation estimates due at 1000 GMT
* Credit Agricole firms; UBS adds to 'key call' list
By Tricia Wright
LONDON, Nov 29 (Reuters) - European shares traded flat on Friday as investors waited to see if euro zone inflation came in higher than expected, which would alleviate pressure on the European Central Bank to add more stimulus.
The pan-European FTSEurofirst 300 was up 0.53 of a point at 1,305.55 by 0841 GMT, having posted its highest closing level in five years the previous day. The euro zone's blue-chip Euro STOXX 50 rose 0.1 percent to 3,094.47 points.
Retail sales in Germany unexpectedly fell in October, cooling enthusiasm over the region's largest economy.
The data came in the wake of higher than expected German consumer prices data on Thursday, which led to speculation euro zone flash inflation estimates for November, due at 1000 GMT, would beat expectations for a paltry 0.8 percent rise.
"There's still talk of whether the (ECB) could take action in terms of alternative measures, and so (these data releases) will be seen in that light," Keith Bowman, equity analyst at Hargreaves Lansdown, said.
"The German retail sales figures could potentially add to the possibility of the ECB taking action but more important are the inflation figures; that's the key data in terms of whether it could push the ECB to action or not."
The ECB cut rates to a record low after inflation in the euro zone eased to 0.7 percent in October - well below the bank's target for inflation of close to but below 2 percent.
Several ECB members have said since then that they are open to taking new steps to prevent deflationary pressure from harming the economic outlook.
Credit Agricole, up 2.5 percent to 9.17 euros, was among top gainers in Europe as UBS added the French bank to its 'key call' list, with an increased target price of 10.80 euros.
"(It) is one of the most compelling self-help stories in the European banking sector," UBS wrote in a note. "Depressed valuation reflects continued market concerns about low capital and high leverage at the listed-entity level, in our view. We think these concerns are overplayed."
European stocks have posted steep gains since late June, with the Euro STOXX 50 jumping nearly 25 percent, but the rally has lost steam over the past weeks, hampered by some disappointing earnings releases.
This has lifted valuations above their long-term averages, with the STOXX Europe 600 on a 12-month forward price/earnings ratio of 13.5 times against its 10-year average of 12 times, Thomson Reuters Datastream shows.
Some analysts were, nevertheless, confident of the traditional festive rally.
"The default move seems to be upwards... there's a bit more focus on valuation levels having moved as fast as they have," Ian Williams, equity analyst at Peel Hunt, said.
"We'll see if we can get the so-called Santa rally starting early... maybe we've had quite a big chunk of that already, so it might not be quite as strong as the December periods we often get."
Valerie Gastaldy, head of technical analysis firm Day By Day, targeted 3,170 on the Euro STOXX 50 for December or the first days of January, seeing scope for any near-term downward movement to be limited to 3,060.