Telecoms lead Europe shrs up; M&A talk lifts banks

LONDON, May 22 (Reuters) - European shares ended higher on Thursday, lifted by telecom stocks and by banks that gained on consolidation talk, while a dip in the price of crude took energy stocks lower.

The pan-European FTSEurofirst 300 index of top European shares ended unofficially 0.36 percent higher at 1,345.52 points, with telecoms contributing most points to the index.

Telecom Italia (TLIT.MI: Quote, Profile, Research, Stock Buzz) gained 4.6 percent on relief that a regulator's ruling over termination rates was less severe than expected.

Cable & Wireless (CW.L: Quote, Profile, Research, Stock Buzz) rose 2.7 percent after it said it was demerging its two divisions, and Vodafone (VOD.L: Quote, Profile, Research, Stock Buzz) gained 3.1 percent as investors bet on strong results, traders said.

Commerzbank (CBKG.DE: Quote, Profile, Research, Stock Buzz) gained 2.4 percent and Deutsche Postbank (DPBGn.DE: Quote, Profile, Research, Stock Buzz) rose 1.2 percent on a German magazine report that Commerzbank and Allianz (ALVG.DE: Quote, Profile, Research, Stock Buzz) had bid 10 billion euros ($15.76 billion) for Postbank.

Heavyweight oil stocks BP (BP.L: Quote, Profile, Research, Stock Buzz), Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) and Total (TOTF.PA: Quote, Profile, Research, Stock Buzz) fell 0.5-2.0 percent, tracking a fall in the price of crude to just above $132 a barrel.

Analysts said markets were likely to drift in the short term.

"We're likely to be range bound," said John Haynes, strategist at Rensburg Sheppard Investment Management.

"A disorderly shrinkage of liquidity is unlikely but the question is: is there enough gas in the tank to generate much positive momentum?"