European shares led higher by Italy banks, miners

* FTSEurofirst 300 up 0.8 pct

* Italian banks outperform on hopes of a state plan

* Nestle lower as shares go ex dividend

* SAP recovers after mixed update (ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). Adds details, updates prices)

By Danilo Masoni and Alistair Smout

MILAN/LONDON, April 11 (Reuters) - European shares were higher on Monday, reversing earlier losses, helped by gains in Italian banks and mining stocks.

The pan-European FTSEurofirst 300 index had risen 0.8 percent to 1,314.42 points by 1109 GMT, after gaining 1.2 percent in the previous session. In spite of the gains the index is down almost 9 percent so far this year.

The Italian banking sector index rose sharply for a second straight session on hopes the Italian government will soon thrash out a plan to set up a state-backed fund to buy bad loans and plug capital shortfalls.

“(There) seems to be a reaction to central bank news surrounding the creation of a recapitalisation fund in Italy to shore up the banks,” said James Helliwell, Head of Markets, Lex van Dam Trading Academy.

“The news has been received positively following ongoing concern around the risks within the European banking sector.”

Shares in Monte dei Paschi rose 9.7 percent, while UniCredit and Intesa Sanpaolo, the country’s two biggest lenders, climbed 5.8 and 4 percent respectively.

Gategroup soared by 15.5 percent, boosted after China’s HNA Group made an agreed offer for the Swiss airline catering group.

The STOXX 600 Basic Resource index rose 2.3 percent, making it the biggest sectoral gainer, after copper climbed on Monday from near its lowest in more than a month after middling U.S. wholesale inventories bruised the dollar. Shares in Anglo American, Glencore and Rio Tinto were all up more than 1.7 percent.

A weaker dollar makes commodities cheaper for buyers holding other currencies

SAP fell as much as 2.6 percent after the company warned that first-quarter results would be weaker than expected due to slower sales of software licenses to corporate customers, particularly in Brazil and the United States.

However, it recovered to trade up 1 percent, with analysts highlighting bright spots in the report.

“Despite the fact that SAP missed expectations, (it) performed quite well compared to its peers in terms of profitability,” analysts at DZ Bank said in a note.

Food company Nestle fell 2.8 percent, topping losers on the FTSEurofirst, as its shares went ex-dividend.

Shares in Daily Mail & General Trust were broadly flat after the Wall Street Journal reported that the parent company of Britain’s Daily Mail newspaper was in talks with several private equity firms about a possible bid for Yahoo Inc .

Today’s European research round-up

ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

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Mike Dolan, Markets Editor EMEA. (Additional reporting by Sudip Kar-Gupta and Kit Rees)