* FTSEurofirst 300 up 0.2 pct, Euro STOXX 50 up 0.1 pct
* Euro zone, China PMI raise growth expectations
* Lower-than-expected LTRO repayment hits banking shares
By Francesco Canepa
LONDON, Feb 1 (Reuters) - European shares inched up on Friday, as upbeat factory data from the euro zone and China raised expectations for a gradual recovery in the global economy ahead of a major U.S. data release.
A survey of euro zone manufacturers showed they had their best month in nearly a year in January, boosted by burgeoning German output and offering signs the worst may be over for the troubled currency bloc.
Two versions of China's PMI also showed factory output in the world's largest consumer of metals rose in January, boosting heavyweight basic resources stocks, which were up 0.4 percent.
They helped the FTSEurofirst 300 index of pan-European shares rise 0.2 percent to 1,166.50 points and created a positive backdrop for the traditionally influential U.S. non-farm payrolls numbers at 1330 GMT.
"We're entering a synchronised period of economic strength, which would be good for commodities and stocks and bad for government bonds," Trevor Greetham, head of tactical asset allocation and portfolio manager at Fidelity's Investment Solutions Group, which manages $41 billion of assets.
Greetham was "overweight" equities and property, while he was underweight bonds on expectations accommodative central bank policies across the globe would continue to support economic growth.
The FTSEurofirst 300 is up 14 percent since last July when the European Central Bank's pledge to do all that was needed to protect the euro began to drive down yields on Italian and Spanish bonds and sent investors looking for the higher returns of equities.
UK telecoms group BT was the top riser as it reported better-than-expected results, sending its shares 5.5 percent higher in volume already above its full-day 90-day average.
Curbing gains was the euro zone banking sector, which turned 0.7 percent lower after data showed lenders would repay less-than-expected of emergency 3-year loans from the European Central Bank next week.
Some cast the planned repayment of 3.5 billion euros as a sign of caution after the banks paid a whopping 137 billion euros back this week. But expectations for the second round of payments had been low anyway, and the figures did not undermine the message that banks may have healed faster than earlier thought.
Still, Spanish lender BBVA offered a reminder of the problems facing the sector, falling 1 percent after net profit dropped 44 percent in 2012 due to big provisions against soured property assets in its home market.
The country's Ibex underperformed, shedding 1.9 percent after the market regulator lifted its ban on selling borrowed stocks and bonds. That suggested some investors were betting on declines in Spanish stocks after a 23 percent rally in the past month.
The broader euro zone Euro STOXX 50 index was up 0.1 percent at 2,705.22 points on Friday, taking its gains for the year to 2.7 percent.
A surge of new money at the start of 2013 has underpinned the stocks rally and trading volumes in European equities were up 45 percent in January, also boosted by a spike in volatility at the end of the month.
Thirty-minute charts showed the Euro STOXX 50 was poised for further gains as it held above a key level at 2,696, a bottom tested on January 22 and 24, as well as earlier on Friday, according to Philippe Delabarre, an analyst at Trading Central.
But some longer-term investors had started to take profit on European shares after a 28 percent rally since late July.
Wouter Sturkenboom, investment strategist at Russell Investments, had tactically reduced his equity weighting to slightly "underweight" while he was "overweight" cash, believing the share price rally had taken valuations to levels that are unattractive in the context of low economic growth.
Russel, which has $170 billion under management, expected Friday's U.S. non-farm payrolls report to show 168,000 jobs were added in January. A Reuters poll of analysts shows a consensus of 160,000.
Sturkenboom said a reading of more than 200,000 might lead him to reconsider his view that U.S. growth is slowing, while one of less than 100,000 would raise an alarm bell.