* FTSEurofirst 300 index 0.03 percent higher
* Smiths Group jumps after rejects medical unit bid
* BP gains as Rosneft deal is seen positive
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By Joanne Frearson
LONDON, Jan 17 (Reuters) - European shares were flat on Monday ahead of a euro zone meeting to discuss enlarging the sovereign debt bailout fund, while Smiths Group jumped after it rejected a bid for its medical services unit.
By 0956 GMT, the pan-European FTSEurofirst 300 index of top shares was 0.03 percent higher at 1,156.52 points after being up as much as 1,159.85.
Euro zone finance ministers will discuss an increase in the effective lending capacity of the euro zone rescue fund, in an effort To draw a line under the sovereign debt crisis before more countries need help.
"Euro zone issues will be a focus today. At the moment I cannot see them increasing the rescue fund; it seems Portugal and Spain seem to be okay following their bond auctions last week," Will Hedden, a sales trader at IG Index, said.
The meeting could give investors a better sense of how much agreement or dissent there is among members to enlarge the facility. Germany has said the volume of the euro zone's safety fund is sufficient.
"We have been range trading and I think the market would see no increase in the rescue fund as positive," Hedden said.
Looking at movers on the upside, British engineering firm Smiths soared 11.2 percent after it rejected a 2.45 billion pound ($3.88 billion) cash bid approach for its medical services unit.
"The rejection of the bid strongly suggest Smiths management are confident in achieving a higher value for the business," Credit Suisse analysts said.
British artificial knee and hip maker Smith & Nephew rose 5 percent, boosted by a weekend press report that Johnson & Johnson was considering a formal offer worth at least 800 pence a share for the company. Smith & Nephew had said on Friday it was not currently in talks over a merger or takeover, while J&J said last week it did not comment on rumours or speculation as a matter of policy.
BP GAINS
Oil stocks were amongst the best performers, with the STOXX Europe 600 Oil & Gas index 0.6 percent higher.
BP gained 1.7 percent after Russia's state-controlled Rosneft agreed to a share swap in a deal that gives the UK company access to areas of the Arctic previously reserved for Russian oil companies.
"This is a unique opportunity for BP to gain access to a prospective new frontier area, where direct access as a non-Russian company would not have been possible," Goldman Sachs said in a note.
The broker said it sees a 14 percent upside to its 12-month cash returns-based 570 pence target price.
On the downside, miners continued their slide from Friday's session when China's central bank raised lenders' required reserves prompting fears Chinese growth would cool down.
The STOXX Europe 600 Basic Resources slipped 0.7 percent, while Anglo American, BHP Billiton and Fresnillo fell 0.7 to 3.1 percent.
Across Europe, the FTSE 100 index was down 0.1 percent, Germany's DAX was 0.2 percent lower and France's CAC 40 was down 0.3 percent.
The Peripheral Eurozone Countries Index was 1.2 percent lower. (Editing by Hans Peters)