European shares creep up by midday, Bayer soars

* FTSEurofirst 300 edges up by midday, erasing early losses

* Ericsson, Nokia sink on bleak mobile phone sales outlook

* Bayer jumps on FDA panel OK for potential blockbuster drug

By Peter Starck

FRANKFURT, March 20 (Reuters) - European shares traded slightly higher at midday on Friday, with losses in telecoms equipment makers Ericsson (ERICb.ST) and Nokia (NOK1V.HE) offset by gains in drugmaker Bayer BAYG.DE.

At 1235 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 0.1 percent at 716.14 points, having fallen as much as 1.4 percent earlier in the session.

Analysts linked the upward move to U.S. stock index futures turning into positive territory.

Ericsson fell 8.8 percent after Sony Ericsson (6758.T) (ERICb.ST), the world number four mobile phone maker, said it expected to make a pretax loss of 340-390 million euros in the first quarter, citing weak consumer demand and de-stocking.

"We see this as a negative leading indicator for the Q1 reporting season in the handset market," WestLB analyst Thomas Langer said in a note.

Nokia (NOK1V.HE), the world's biggest maker of mobile phones, fell 5.6 percent. The DJ Stoxx technology index .SX8P was the top sectoral loser, down 3.9 percent.

"Disappointing corporate news is still bad news for share prices. Only once this effect has dissipated can equities trade at significantly higher levels," said Commerzbank analyst Gunnar Harmann.

But German brokerage Steubing said stock markets appeared to have priced in the worst.

"Equities are close to valuations which last have been observed in 2003, which was the beginning of the previous primary bull market trend," Steubing said in a note.

And Barclays Wealth flagged a shift in favour of cyclicals.

"It is the right time to start looking at moving from a defensive stance in portfolios and add more cyclical exposure," said equity analyst Amanda Purton.