* STOXX 600 index up 0.1 pct
* Financials provide biggest lift
* But rate outlook hits utilities
* Oil stocks rise but come off highs
* BT jumps after network separation deal
(Adds details, closing prices)
By Danilo Masoni and Kit Rees
MILAN/LONDON, March 10 European shares came off
highs on Friday, as growing talk about central bank tightening
in the region hit utilities and export-oriented stocks but
continued to boost the heavyweight banking sector.
A report that some European Central Bank (ECB) policymakers
had discussed the possibility of rate hikes sent government bond
yields soaring, making dividend-paying sectors like utilities
The euro also surged on the report by news agency Bloomberg,
weighing on the DAX which is heavily geared to
export-oriented stocks like industrial and auto makers. The
German blue chip index fell 0.1 percent.
But the pan-European STOXX 600 index managed to end
in positive territory, up 0.1 percent, as banks - its
biggest sub-sector with a market value of 1.2 trillion euros -
rose 0.8 percent, helped by the rate prospects.
Stronger than expected jobs data in the U.S. earlier on
Friday also helped, further cementing expectations of a rate
hike next week in the world's largest economy.
"Higher yields mean that (financials) will have better
prospects for revenues, less pressure on their shoulders to
generate revenues," Ipek Ozkardeskaya, senior market analyst at
London Capital Group, said.
Sources told Reuters some ECB rate-setters had raised the
possibility of hiking rates from their current record lows
before the end of QE, but that the discussion was brief, and
there was not broad support for the idea.
On Thursday, the ECB indicated a diminishing urgency for
more policy action, signaling an optimistic outlook for the
European economy and sending banking shares higher. Money
markets are now pricing in an ECB interest rate hike by March
Eurozone banks rose 1.8 percent at a 14-month high,
led by gains of more than 5 percent in Germany's Commerzbank
, Italy's Banco BPM and Spain's Banco Popular
BT was among top STOXX gainers, with the British
telecoms group rising 4 percent after reaching a deal with
regulator Ofcom to legally separate its Openreach network
"We see this as positive for investor sentiment on BT in
terms of removing a notable overhang, an absence of negative
surprises and avoiding a prolonged period of uncertainty had
Ofcom taken its case to the EC," analysts at UBS said in a note.
Among fallers, Segro declined 5.6 percent after the
property developer launched a 573 million pounds rights issue to
fund the purchase of the remaining 50 percent stake in an
airport joint venture.
(Reporting by Danilo Masoni and Kit Rees; Editing by Toby