* STOXX 600 up for 7th straight week
* Sika shares rally after Saint Gobain dispute ends
* ZPG deal boosts DMGT, Rightmove shares
* ArcelorMittal results boost basic resources (Adds closing prices, details)
By Kit Rees
LONDON, May 11 (Reuters) - European stocks achieved their longest weekly winning streak for more than three years on Friday as M&A activity added to an advance on the back of a busy earnings season.
Shares traded in a narrow range, with the pan-European STOXX 600 index ending up 0.1 percent, scoring its seventh straight week of gains and the longest winning streak since March 2015. Germany's DAX fell 0.2 percent while Britain's FTSE 100 added 0.3 percent.
Though moves at the index level were muted, shares in Sika soared 8.3 percent to the top of the STOXX after the Swiss chemicals company reached an agreement with French building materials firm Saint-Gobain to end a long-standing legal dispute.
Saint-Gobain, whose shares rose 2.7 percent, is to take a large stake in Sika, but not majority control.
"We see this as positive for (Saint-Gobain), which we believe has been negatively impacted, with some investors preferring to remain on the side lines because of the uncertainties linked to the Sika operation," Raymond James analysts said in a note.
Shares in Daily Mail and General Trust (DMGT) rose 1.4 percent after U.S.-based private equity firm Silver Lake Management Company agreed to buy ZPG, the owner of British property websites Zoopla and PrimeLocation, for 2.2 billion pounds.
DMGT is the biggest shareholder in ZPG, whose shares rocketed about 30 percent to a record high. Shares in fellow British classifieds websites Rightmove rose 3.8 percent and Auto Trader rallied 2.5 percent.
"A lot of companies that hold overseas money (are) looking in and realising that they're getting a bit of value at the moment with how weak the pound is, relatively speaking," Vertex Capital Group market analyst Jasper Reimers said, referring to the UK equity market.
While the first quarter earnings season was winding down in Europe, basic resources was the best-performing sector after shares in ArcelorMittal rose 2.3 percent. The world's biggest steelmaker beat earnings forecasts and gave an upbeat outlook for 2018.
So far blended year-on-year earnings growth for the first quarter has come in at 16 percent for MSCI EMU, in dollar terms, compared with 26 percent for the S&P 500, according to Thomson Reuters I/B/E/S.
Earnings updates also boosted shares in Italian banks. A return to profit for troubled Italian bank Monte dei Paschi di Siena send its shares up 17.7 percent and added impetus to signs of a tentative recovery among the country's battered lenders on Friday.
"The surprise element in the earnings - which made you think we're at a turning point - was the lower-than-expected loan losses," said Pietropaolo Rinaldi, a fund manager at Anthilia Capital Partners in Milan.
Italian banks have been laid low by a recession that pushed soured loans up to nearly one fifth of total lending. But an economic recovery has brought default rates among companies back down to pre-crisis levels, easing the pressure on banks.
While the Italian banking sector has been under pressure recently on the back of political jitters, the sector is up more than 13.7 percent this year while Italy's benchmark FTSE MIB has risen 10.5 percent.
Reporting by Kit Rees Editing by Louise Ireland and Peter Graff