Europe shares up, commodities claw back gains

LONDON, May 21 (Reuters) - European shares edged up in early trade on Wednesday led by a recovery in mining and energy shares, as the market attempted to stabilise after its worst sell-off in two months.

BP (BP.L: Quote, Profile, Research, Stock Buzz) was the largest individual positive weight on the broader market, rising 1.6 percent, while Royal Dutch Shell (RDSa.AS: Quote, Profile, Research, Stock Buzz) rose 1.2 percent and ENI (ENI.MI: Quote, Profile, Research, Stock Buzz) gained 1 percent. Among miners, Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) rose 1.6 percent.

The FTSEurofirst 300 index of top European shares was up 0.1 percent at 1,352.19 points by 0716 GMT, ahead of German business confidence and the Bank of England's May minutes later in the morning.

Crude oil topping $129 a barrel on Tuesday deepened investor concerns about the spread of inflation because of the surge in commodity prices, though this has made basic resources stocks the top performers in the European equity market this year.

"The current inflation cycle is holding back markets and it's the commodities that are the major problem," said Arthur van Slooten, an equity strategist at Societe Generale in Paris, who added SocGen did not see price pressures leading to wage-price spiral.

"If you're working on the assumption of slower growth in the offing, as we do, the market really should run out of steam, because the market is still too optimistic about earnings, notably in the cyclical sectors," he said.

Other stocks on the move included British building materials group Wolseley (WOS.L: Quote, Profile, Research, Stock Buzz), which rose 2.2 percent to rank among the biggest percentage gainers in Europe after delivering an in-line first-half performance. (Reporting by Amanda Cooper)