European shares flat, trade thin ahead U.S. data

* FTSEurofirst 300 index rises 0.3 percent

* Trading thin ahead U.S. data

* Health care top gainer; Morgan Stanley upgrades Glaxo

* Recent outperformer Rio Tinto down; Shanghai copper falls

By Peter Starck

FRANKFURT, June 11 (Reuters) - European shares traded slightly higher early on Thursday, led by healthcare stocks, with trading thin ahead of U.S. economic data due later in the session.

U.S. weekly jobless claims and retail sales for May are due at 1230 GMT, both sets of data expected by analysts to shed more light on whether the world's largest economy is on the mend.

"Everything depends on the U.S. retail sales data," said Heino Ruland, analyst at Ruland Research.

Economists polled by Reuters expect a 0.5 percent rise in retail sales compared with a 0.4 percent decline in April. Excluding automobiles, sales are expected to rise 0.2 percent compared with a 0.5 percent drop the month before.

"The U.S. weekly jobless claims will be under scrutiny after last week's divergence in payrolls versus the unemployment data," CMC Markets said in a note. [ID:nN05274048] [ID:nNYS005129]

European Central Bank governing council member Christian Noyer said the global economy could start growing again between the end of this year and the middle of 2010. [ID:nHKG272308]

"The global equity market can continue to rally while bond yields are below 5-6 percent," Citigroup said in an equity strategy note.

The yield on 10-year U.S. Treasuries briefly rose above 4.0 percent overnight after a higher than expected yield in an auction of the paper on Wednesday. [ID:nN10564782]

At 0830 GMT, the FTSEurofirst 300 <.FTEU3> index of top European shares was up 0.3 percent at 882.91 points, having closed 1.2 percent higher on Wednesday.

Pharmaceuticals added the most points to the index, with GlaxoSmithKline rising 1.7 percent after positive analyst comments.

Morgan Stanley upgraded the stock to "equal-weight" from "underweight", and Cazenove, which rates Glaxo "outperform", said: "GSK's risk profile for the remainder of 2009 is relatively benign and, as the generic hits begin to wash out, we should see the start of an earnings recovery."

The DJ STOXX healthcare index <.SXDP> rose 1.1 percent.

CAPITAL GOODS "ATTRACTIVE"

Industrial engineering <.SXNP> was another sector showing strength, up 0.6 percent, after Goldman Sachs upgraded capital goods to "attractive" from "neutral".

"Current share prices offer an attractive entry point into the capital goods sector," Goldman said in a sector note.

British diversified engineering group Tomkins , one of the stocks upgraded by Goldman Sachs, rose 4.5 percent.

Also among the gainers, Allied Irish Banks climbed 9.3 percent on news that it would exchange up to 2.7 billion euros ($3.79 billion) worth of bonds in a swap programme to boost its core Tier 1 capital ratio. [ID:nLB374127]

Mining group Rio Tinto was the top blue-chip loser, down 0.7 percent. The stock rose as much as 20 percent between June 4 and 10, distinctly outperforming the DJ STOXX European basic resources index <.SXPP>.

Shanghai copper fell half a percent on Thursday, with investors hesitant to buy into the recent rally, fearing a downward correction in prices on weak fundamentals. [ID:nSHA154461]

The rally in base metals has been partly boosted by economic data showing positive signs for a recovery in the global economy.

Chinese investment surged in May, feeding hopes the world's third-largest economy may lead a recovery, but foreign trade fell more sharply than expected, underscoring warnings that China's economic recovery is not yet on solid ground. [ID:nLB158202]

Back in Europe, shares in Givaudan fell 3.8 percent after the Swiss flavours and fragrances maker announced plans to raise around 420 million Swiss francs ($391 million) by issuing 1 million shares to reduce debt and increase flexibility. [ID:nLB136316]

"A rights issue has been rumoured for some time given the company's indebtedness but the 40 percent discount -- no doubt to ensure it gets away -- appears steep, there is a 13 percent earnings-per-share dilution," Kepler Research said in a note. ($1=1.077 Swiss francs) ($1=.7126 euros) (Editing by Mike Nesbit)