REFILE-Recovery in commodities helps steady Europe shares

(Corrects Reuters Instrument Code for HSBC in para 12)

By Amanda Cooper

LONDON, May 21 (Reuters) - European shares edged up 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 influence on the broader market, rising 2.5 percent, while Royal Dutch Shell (RDSa.AS: Quote, Profile, Research, Stock Buzz) rose 3 percent and Total (TOTF.PA: Quote, Profile, Research, Stock Buzz) 1.7 percent.

Energy shares fell 2 percent on Tuesday , while miners fell by nearly 6 percent. Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) and BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz) reversed some of the previous day's declines to rise 2 percent and 1.8 percent, respectively.

By 0835 GMT the FTSEurofirst 300 index of top European shares was up 0.17 percent at 1,352.82 points. The ratio of declining stocks to advancers was roughly one to one.

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. However, SocGen did not see price pressures leading to wage-price spiral, he added.

"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.