Europe shares up; target best qtr gain since 1999

* FTSEurofirst 300 index up 0.1 pct in choppy trade

* Financials, commodity shares; retailers down

* For up-to-the-minute market news, click on [STXNEWS/EU]

By Atul Prakash

LONDON, June 30 (Reuters) - European shares rose for a second straight session on Tuesday and were on track to post the biggest quarterly rise since late 1999, with banks advancing and commodity shares tracking higher crude oil and metals prices.

At 0839 GMT, the FTSEurofirst 300 <.FTEU3> index of top European shares was up 0.1 percent at 860.11 points after rising up to 864.27 points and falling to a low of 858.01. The index closed 1.8 percent higher in the previous session.

The benchmark, which slumped 45 percent in 2008, has gained more than 17 percent this quarter.

Banks were broadly higher. Barclays , Lloyds , Royal Bank of Scotland and UBS were up 0.7 to 3.2 percent.

"We are still living under a credit crunch and the central banks have very little choice but to keep interest rates quite low for some time," said Luc Van Hecka, chief economist at KBC Securities.

"That may be one of the major fundamental reasons why asset markets have a tendency to remain underpinned. Today we could have some volatility tied to the second quarter ending."

Energy stocks followed crude oil prices , which rose 1 percent to trade above $72 a barrel. BP , Tullow Oil , Total and StatoilHydro added between 0.1 and 1 percent.

But BG Group was down 0.5 percent after it said it will pay Dallas-based Exco Resources Inc $1.3 billion for an interest in shale gas resources, as oil and gas companies continue to snap up assets before an economic recovery drives prices higher. [ID:nLU618520]

Miners got strength from higher metals prices. BHP Billiton , Antofagasta , Rio Tinto and Eurasian Natural Resources rose 0.2 to 1 percent.

In industry news, the head of mining group Xstrata , which has made a "merger-of-equals" proposal to rival Anglo American , said "nil-premium" mergers may not be possible without the cooperation of the intended partner. [ID:nN29405904]

Anglo has rebuffed the proposal and investors have been speculating whether Anglo-Swiss Xstrata would be willing to offer a premium. Anglo shares were down 1.2 percent, while Xstrata gained 0.7 percent.

Automakers were broadly lower. BMW , Daimler AG , Volkswagen AG and Renault fell 0.6 to 1.6 percent.

But Porsche SE rose 1.3 percent after Qatar made an offer to the controlling Porsche and Piech families that could help reduce the mountain of debt at their wholly owned automotive holding Porsche.

Retailers lost ground on the last trading day of the quarter, with Morrison , Tesco , Carrefour and Marks & Spencer down 0.2 to 2.5 percent.

On the macroeconomic front, German unemployment rose by 31,000 on the month in June, adjusted for seasonal swings.

Across Europe, UK's FTSE 100 index <.FTSE>, Germany's DAX index <.GDAXI> and France's CAC 40 <.FCHI> were down 0.1 to 0.2 percent.