European shares weighed by weaker autos; Taylor Wimpey, Vodafone rise

(ADVISORY- Reuters plans to replace intra-day European and UKstock market reports with a Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets for site in development. See the bottom of the report for moredetails)

* FTSEurofirst 300 steadies after touching two-week highs

* Fiat Chrysler leads auto sector lower after downgrade

* Taylor Wimpey, Vodafone surge after update

By Atul Prakash and Danilo Masoni

LONDON/MILAN, May 17 (Reuters) - European shares steadied onTuesday with gains companies such as Taylor Wimpey andVodafone following encouraging updates offset by aweaker auto sector.

The pan-European FTSEurofirst 300 was littlechanged by 1245 GMT after earlier rising to its highest sinceearly May. The index, which closed flat in the previous session,is still down 8.5 percent this year.

Taylor Wimpey advanced 4.8 percent after the housebuilderannounced a new special payout, promising investors about 1.3billion pounds over three years, underpinned by strong demandfor property in the UK.

Vodafone was up 2 percent after the world's second-largestmobile phone operator said its earnings growth would acceleratethis year. The group said a programme to improve its networkshad boosted demand in Europe and helped it to return tounderlying growth in 2016 revenue and core earnings for thefirst time since 2008.

"Demand for data continues to grow strongly ... and Vodafonehave invested heavily in infrastructure to capitalise on this,"Steve Clayton, head of equity research at Hargreaves Lansdown,said.

The STOXX Europe 600 Auto index fell 2.3 percent,making it the top sectoral loser. Fiat Chrysler (FCA) fell 4.4 percent after Exane BNP Paribas downgrades the stock to"underperform".

"After 7 years of global auto expansion - and unprecedentedNAFTA returns - FCA has done too little to insure itself againsta downturn in our view. As the end of a lease driven bubbleapproaches, and M&A optionality fades, FCA looks out of time,"it said in a note.

Greek banks advanced 4 percent, with UBS turningmore positive on the Greek banking sector arguing that signs ofprogress in talks with Greece's lenders meant the sector couldrebound.

"The starting point is very challenging and risks abound,but we see a fundamental investment case and valuations suggestupside potential," UBS analysts said, referring to Greek banks.

The STOXX Europe 600 Basic Resources index rose 0.7percent, coming off earlier highs after copper prices slippedtowards the recent lows brought about by a resurfacing ofworries over demand growth in top consumer China.

Today's European research round-up

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Mike Dolan, Markets Editor EMEA. (Additional reporting by Sudip Kar-Gupta; Editing by AlisonWilliams)