Europe shares dip but upward trend seen intact

* FTSEurofirst 300 falls 0.6 pct after Friday's 9-month peak

* Oils track weaker crude; banks slip after recent gains

* Company valuations rising; potential for further expansion

* For up-to-the-minute market news, click on [STXNEWS/EU]

By Atul Prakash

LONDON, Aug 10 (Reuters) - European equities were lower by midday on Monday as investors took profits from nine-month highs in the previous session, with oils tracking weaker crude prices and banks losing ground after recent sharp gains.

Analysts said the market was expected to trade in a wide range during the current European summer vacation season, but overall trend remained positive following better-than-expected earnings results and encouraging macroeconomic numbers across the globe.

At 1044 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.6 percent at 944.79 points after surging 1.3 percent in the previous session to hit its highest closing level in more than nine months.

The benchmark index ended higher for a fourth straight week on Friday and, despite Monday's losses, is up 46 percent since hitting a lifetime low in March. It slumped 45 percent in 2008.

"Looking to the coming weeks, seasonal aspects suggest that the much more bullish sentiment recently will be subjected to a brief test once the predominantly positive impulses from the second quarter reporting season run their course," said Gerhard Schwarz, head of global equity strategy at UniCredit.

"Setbacks should, however, remain moderate and short lived. We continue to recommend exploiting setbacks to increase equity exposure," he added.

Banks were among top losers, with Lloyds (LLOY.L) falling 3.8 percent on a report in The Sunday Times that the bank may consider a multi-billion pound share issue as part of a partial withdrawal from the government's asset protection scheme.

Other banks also fell, with HSBC (HSBA.L), Barclays (BARC.L), Royal Bank of Scotland (RBS.L), BNP Paribas (BNPP.PA) and Societe Generale (SOGN.PA) down 0.7 to 4.3 percent.

Energy shares dropped after crude fell 0.3 percent. Royal Dutch Shell (RDSa.L), BG Group (BG.L), Total (TOTF.PA) and StatoilHydro (STL.OL) shed between 0.3 and 1.2 percent.

"Maybe this morning, it's just profit taking. We are in the middle of a vacation period and may not see a significant movement in the coming days," said Chicuong Dang, equity analyst at Richelieu Finance.