UPDATE 1-Easing tariff fears buoy European shares; M&A, earnings in focus

* STOXX 600 rises hesitantly

* ACS gains after Atlantia confirms talks over Abertis

* Abertis shares down 3.8 pct

* Countrywide sinks 20 pct(Updates prices, adds detail)

By Helen Reid

LONDON, March 8 (Reuters) - European shares edged higher onThursday, as dealmaking gathered pace and fears of a trade wareased, though some disappointing earnings updates weighed.

The pan-European STOXX 600 rose 0.3 percent by 0930GMT, with defensive sectors leading the way while oil andmaterials stocks weighed amid signs the U.S. could makeconcessions over planned tariffs.

Merger and acquisition news drove big stock moves in Europewhile benchmark-level trading was muted as investors awaited theoutcome of a European Central Bank meeting later in the day.

Spanish construction firm ACS rose to the top ofthe index, up 9.3 percent after reports it was in talks withItaly's Atlantia to break up Abertis in aneffort to avoid a bidding war for the highway concessionscompany.

Atlantia, which confirmed preliminary talks with ACS overAbertis, gained 3.8 percent, while Abertis fell 3.9 percent.

Shares in Hochtief, which had also bid forAbertis, rose 4.8 percent.

"It's positive news since instead of a bidding war therewill be a division of assets and we'll get a fairer price andmaybe better synergies," said Stefano Fabiani, fund manager atItaly's Zenit.

Another Milan-based fund manager said: "It's particularlygood news for ACS/Hochtief since the market didn't like theiroffer because it increased leverage."

Renault shares fell to the bottom of France's CAC40 after the French government said it was not preparedto sell its stake in the carmaker.

The stock had touched its highest since Dec 2015 onWednesday after Reuters reported Nissan was in talks to buy thestake.

Earnings took their toll on some stocks.

French supermarket Casino dropped 5.8 percentafter its results disappointed investors. Thegrocer said profit grew over 10 percent in France for the year,against market expectations for 14 percent.

A Reuters report that Amazon.com is preparing tosell electronics directly into Brazil, a key market for Casino,could also be weighing on the shares, a trader said.

Hugo Boss shares fell 4.9 percent after theGerman fashion house struck a more cautious tone on profit as itkept up investment in revamping stores and its website.

"There is likely to be some disappointment that improvingsales momentum is still not dropping through to EBITDA, with themidpoint of FY18 guidance 5 percent below consensus," said UBSanalysts.

A trader said the results set a worrying tone for the yeargiven the stock's recent negative performance. "Same story asfor most retailers as intensifying competition shows no sign ofabating," he said.

Boskalis Westminster sank 10.6 percent, the worstSTOXX 600 performer, after the construction and engineering firmreported full-year earnings and said it would be a "challenge"to match 2017 results.

Axel Springer sank 10 percent after resultstriggered profit taking.

While auto and supplier stocks continued tounderperform, having been the worst-hit by fears the U.S. tariffthreat, Sweden's Saab jumped 6.6 percent after SEBgave the stock a 'buy' rating.(Reporting by Helen Reid, Additional Reporting by StephenJewkes, Editing by Danilo Masoni and John Stonestreet)