* FTSEurofirst 300 closes 0.3 pct higher; falls in week
* Vedanta Resources drops on Cairn India deal news
* Delhaize falls as it cuts outlook
* Aviva surges on RSA approach talk
By Brian Gorman
LONDON, Aug 13 (Reuters) - European shares made modest gains for a second straight day on Friday, but finished lower for the week as investors continued to worry about the strength of the economic recovery.
The pan-European FTSEurofirst 300 .FTEU3 index of top shares rose 0.3 percent to close at 1,045.65 points, having moved in and out of positive territory during the session. Over the week, the index fell 1.1 percent, its biggest decline in six weeks.
Delhaize DELB.BR plunged 11.2 percent after the Belgian supermarket group cut its 2010 outlook. [ID:nLDE67A0YB]
Economic data was mixed. European economic growth accelerated sharply in the second quarter of 2010 as Germany’s best performance since reunification more than made up for the struggles of Spain, Ireland and recession-ravaged Greece. [ID:nLDE67C0YX]
U.S. retail sales rebounded in July but showed hints of lingering economic softness, as did inflation data showing underlying price pressures stuck at their lowest level since the 1960s. [ID:nN13180040]
U.S. consumer sentiment appeared to have stabilized in August following a sharp drop in July, while business inventories rose more than analysts had been expecting.
Analysts played down the significance of the rally in equities over the last two sessions, with trading volumes for the European benchmark less than 70 percent of their average for the last 90 days.
“Volumes are pitiful,” said Andy Lynch, fund manager at Schroders. “Price discovery is pretty limited. The next movement is probably down. The American recovery is still in doubt ... It’s all rather depressing.”
Aviva (AV.L) rose 5.5 percent following a report that the insurer had rejected a 5 billion pound ($7.79 billion) offer from RSA (RSA.L), which fell 0.9 percent. Aviva declined to comment on the report.
Most other UK insurers rose, with Legal & General (LGEN.L) and Standard Life SL.L up 3.2 and 3 percent respectively.
Vedanta Resources (VED.L) fell 5.9 percent, taking its decline over four days to more than 20 percent, as sources said the company was close to finalising a deal to buy a majority stake in Cairn Energy’s (CNE.L) Indian unit, Cairn India (CAIL.BO). Cairn Energy rose 3.4 percent.
Defensive sectors were generally among the best performers. GlaxoSmithKline (GSK.L) rose 2.4 percent, extending gains from Thursday, when it was announced that U.S. advisers had recommended approval of Potiga, a new epilepsy drug.
Portugal Telecom (PT) PTC.LS rose 1.2 percent, after ratings agency S&P said: “We are affirming the ‘BBB/A-2’ ratings on PT, and removing them from CreditWatch with negative implications.”
Worries about debts in Europe’s peripheral economies resurfaced. Italy’s bond sale drew lower bid/cover ratios compared with the previous sales in July and May respectively. [ID:nLDE67C0PV]
“There are still underlying debt problems. In the Italian bond auctions the bid cover/ratios were disappointing,” said Giuseppe-Guido Amato, Lang & Schwarz strategist. “Earnings season is now flattening out and equities have not got the momentum to break to the upside.” (Additional reporting by Joanne Frearson; Editing by Sharon Lindores) ($1=.6415 Pound)