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* FTSE 100 down 0.1 pct, investor sentiment muted onearnings
* Q2 GDP data in focus after IMF upgrades
* RBS jumps 14 pct, biggest one-day gain in four years
* BSkyB deal hits shares, Burberry weaker on LVMH
LONDON, July 25 (Reuters) - UK shares edged lower in earlytrading on Friday, ahead of second quarter GDP data, asinvestors digested a raft of corporate results and Royal Bank ofScotland enjoyed an unexpected pop from earnings.
Investor sentiment was muted across Europe, held back bydisappointing earnings on both sides of the Atlantic and by athird consecutive monthly fall in the widely followed German Ifosurvey of business sentiment.
Merger activity also dominated early trading, with BSkyB agreeing to pay 4.9 billion pounds ($8.3 billion) incash to buy Rupert Murdoch's pay-TV assets in Germany and Italy.Construction companies Balfour Beatty and Carillion rallied after confirming merger talks.
The FTSE 100 index was down 0.1 percent, slightly betterthan Germany's DAX and the French CAC 40, whilethe pan-European FTSEurofirst 300 was down 0.2 percent.
A preliminary reading of second quarter British grossdomestic product was in focus after the International MonetaryFund this week upgraded its forecasts for the UK economy.
"Today's first iteration of Q2 GDP could well be a goodindicator of how well the UK economy is shaping up for the restof the year," CMC Markets analyst Michael Hewson said.
Shares of RBS soared 14.5 percent, their biggest intradaygain in at least four years, after the lender released earningsa week early that were much better than expected.
Network operator Vodafone was also up 2.2 percentafter saying its performance had begun to stabilise in severalEuropean markets even as a slowdown in Spain and South Africaled to another heavy drop in its key revenue measure.
Meanwhile, BSkyB fell 2.4 percent, the worst performer onthe FTSE 100, with traders citing the placement of sharesrepresenting around 10 percent of the company's capital to helppay for its announced asset purchases.
Burberry fell 1.9 percent after French luxury goodsgroup LVMH posted below-forecast second quarter salesand profits, hit by a drop in demand from China.
Another heavy faller was drugmaker GlaxoSmithKline,down 1.8 percent. The company faces new allegations ofcorruption, this time in Syria, where the drugmaker and itsdistributor have been accused of paying bribes to securebusiness, according to a whistleblower's email.
Publisher Pearson posted a 41 percent slump infirst-half profit, reflecting increased restructuring charges,currency movements and phasing in of revenues into the secondhalf, though an increased dividend helped the stock tradehigher. (Reporting by Lionel Laurent; Editing by Catherine Evans)
