* FTSEurofirst 300 up 0.3 percent following Monday's selloff
* Telecoms, healthcare and utilities stocks climb
* Banks sag; NBG's rights issue revives concerns
* For up-to-the-minute market news, click on
By Blaise Robinson
PARIS, June 16 (Reuters) - European shares inched higher on Tuesday by midday, as energy and defensive stock gains offset bank losses after a planned rights issue by National Bank of Greece revived fears over banks' balance sheets.
Shares of NBG tumbled 10 percent after Greece's largest lender said its board would convene this week to decide on a rights issue of up to 1.25 billion euros.
Other financial institutions retreated, trimming some of their recent strong gains. UBS fell 2.7 percent, ING Groep dropped 5 percent, Societe Generale lost 2 percent and UniCredit shed 1.9 percent.
"NBG's capital hike strengthens our belief that European banks will have to raise significant new amounts of capital. It's a very negative signal sent to the markets," a Paris-based trader said.
The European Central Bank said on Monday that euro zone banks would probably need to write down another $283 billion this year and next on bad loans and securities.
At 1041 GMT, the FTSEurofirst 300 index of top European shares was up 0.3 percent at 865.94 points. The benchmark index, up 3.8 percent in the year-to-date, sank 2.5 percent on Monday, falling along with stock markets around the world on mounting doubts about a global economic recovery.
"We're stuck in a tight range, and there is no fundamental reason for the market to move lower or higher at this point," said David Thebault, head of quantitative sales trading at Global Equities, in Paris.
"The question that everybody is asking now is: will the indexes break out on the upside or on the downside of the range? One thing is clear: with the end of the quarter looming, fund managers that made lofty gains in the spring rally are keen on locking in these profits, and that will weigh on the market."
DEFENSIVES SHINE
Shares of oil producers gained ground as crude prices rebounded, up $1.04 at $71.66 a barrel as the dollar slipped after Russia said the world needed new reserve currencies. Total gained 1.6 percent and Royal Dutch Shell rose 1.1 percent.
Defensive stocks were on the rise, with Vodafone up 1.6 percent, Sanofi Aventis up 2 percent and E.ON up 0.7 percent.
Defensive plays are stocks of companies that tend to weather a recession better than others because their products or services -- such as food or drugs or electricity -- are things that people buy, even if they cut spending, in leaner times.
Tesco rose 1.6 percent after the world's third-biggest retailer posted its best quarterly sales rise in Britain for two years and said it was closing the gap on recent stronger growth rates at its main domestic rivals.
Around Europe, UK's FTSE 100 index was up 0.4 percent, Germany's DAX index rose 0.3 percent, and France's CAC 40 was 0.4 percent higher.
The FTSEurofirst 300 is up 34 percent since reaching a record low in early March, but is still down 47 percent from the multi-year high reached in mid-2007.
"Apart from a reminder that volatility is not dead yet, we would be tempted to see (Monday's) retreat as a healthy pause in a rally that has been relatively fast," Arthur van Slooten, European equity strategist at Societe Generale, wrote in a note.
"The longer term perspective of avoiding deflation still seems valid with massive government support now starting to yield results."
Investors will keep an eye on macro data from the United States later in the day, with U.S. housing starts due 1230 GMT, and industrial production due 1315 GMT. (Editing by Simon Jessop)