* German banks lead sector higher
* Miners rise, boosted by Brazil's Vale convertibles
* Drugmakers, telecoms slip
* For up-to-the-minute market news, click on []
By Dominic Lau
LONDON, July 7 (Reuters) - European shares drifted higher in
morning trade on Tuesday, boosted by banks and miners but
defensive drugmakers and telecoms came under pressure.
By 0840 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.3 percent at 835.32 points in a choppy
session, after falling 1.1 percent on Monday for its third
straight losing session.
"Certainly coming into this earnings season, there is going
to be plenty of speculations as to what are the results coming
through, what are the guidance for the forthcoming quarters,"
said Stephen Pope, chief global market strategist at Cantor
Fitzgerald.
"To that regard, we are going to see the market is pretty
much (trading) on a day-by-day basis. I don't think you can see
genuine pattern emerge until where we are, perhaps, a good third
into the earnings season."
Alcoa <AA.N> is set to kick off the U.S. earnings season
when it announces its second-quarter results on Wednesday.
European banks gained on Tuesday with German lenders leading
the way after media reported the government plans to loosen
capital rules. Commerzbank <CBKG.DE> rose 4.4 percent, while
Postbank <DPBGn.DE> advanced 2.7 percent and Deutsche Bank
<DBKGn.DE> added 1.9 percent.
"Commerzbank, as the bank with the weakest asset quality,
should benefit most from a loosening of the capital rules.
Postbank, which has the lowest capital ratios of the listed
German Banks, should also benefit from such a change," Equient
said in a note.
Elsewhere in the banking sector, Credit Suisse <CSGN.VX>,
UniCredit <CRDI.MI> and Raiffeisen <RIBH.VI> rose 1.3-4.3
percent.
Miners were also higher, with Lonmin <LMI.L>, Kazakhmys
<KAZ.L>, Vedanta Resources <VED.L>, BHP Billiton <BLT.L> and
Anglo American <AAL.L> up between 2.7 percent and 5 percent.
"Vale <VALE5.SA> has a $1 billion convertible fundraising.
Obviously, the market views the money could be used as a
platform for acquistion. The question is what it will try to
acquire," a London-based trader said. "That instigates the
interest in miners even though commodity prices are weaker."
CRH <CRH.I>, one of the world's biggest building suppliers,
reversed earlier losses and traded up 4.9 percent after the
Irish company said it expected its U.S. highway business would
be very busy in the second half of the year as a government
stimulus programme kicks in.
CRH reported a first-half pretax profit of 100 million
euros, down from last year's 600 million.
Defensive drugmakers and telecoms were weaker, with Novartis
<NOVN.VX>, GlaxoSmithKline <GSK.L> and Roche <ROG.VX> down
0.2-0.9 percent. Shire <SHP.L> advanced 1.3 percent after it
filed a treatment protocol for its Velaglucerase Alfa for
Gaucher disease.
In the telecoms sector, Vodafone <VOD.L>, BT Group <BT.L>
and Cable & Wireless <CW.L> lost 0.7-1.7 percent.
Across Europe, Britain's FTSE 100 <> put on 0.4
percent, Germany's DAX <> added 0.4 percent and France's
CAC 40 <> was up 0.3 percent.
The pan-European index has rallied 38 percent from a
lifetime low hit on March 9, but the sharp bounce stalled last
month and the benchmark is down 6 percent since June 10.
(Editing by Dan Lalor)
