* FTSEurofirst 300 closes flat
* Upbeat ADP jobs, service sector data boosts sentiment
* Mining, chemical shares among heaviest fallers
By Brian Gorman
LONDON, Jan 5 (Reuters) - European shares closed flat on Wednesday as a report showing a large increase in U.S. job creation was countered by a stronger dollar that helped weaken metals prices and halt a rally in the mining sector.
The pan-European FTSEurofirst 300 index of top shares rose 0.04 percent to close at 1,142.46 points, with the U.S. jobs data helping it climb off a day's low of 1,128.49.
Metals prices retreated after a strong run, sending some heavyweight mining shares lower. Anglo American, BHP Billiton and Rio Tinto fell between 0.6 and 1.7 percent.
U.S. private employers added 297,000 jobs in December, the biggest rise since at least 2001, a report showed. The median estimate from 27 economists surveyed by Reuters for the ADP Employer Services report was for 100,000.
Adding to the feeling of a strong recovery in the world's biggest economy, the U.S. non-manufacturing sector grew in December at its fastest pace in more than four years, according to an industry report.
"The ADP and ISM data would suggest things are going very well, though if it's going so well then central banks will have to put up interest rates," said Andy Lynch, fund manager at Schroders.
The ADP figures came ahead of the U.S. government's much more comprehensive labour market report on Friday, which includes public and private sector employment.
Energy stocks were among the gainers as crude prices shrugged off the stronger dollar and reversed earlier losses, with Brent topping $95 after a U.S. government report showed that inventories had fallen more than expected.
Total, ENI, BP and Statoil rose between 0.4 and 1.3 percent. Oil services firm Technip rose 3 percent after a contract win in Vietnam.
"The market has been dragged higher by commodities in the last year and, if you can see a U.S. recovery this year, it's probably got further to go," a London-based trader said.
Heavyweight banks to rise included HSBC, up 3.1 percent.
Across Europe, Britain's FTSE 100 rose 0.5 percent to its highest close in 31 months. Germany's DAX and France's CAC40 fell 0.5 and 0.3 percent respectively.
The European benchmark rose 7.3 percent in 2010, after gaining more than 25 percent in 2009. It is up 77 percent from its lifetime low in March 2009 with several major economies having emerged from recession, helped by stimulus from governments worldwide and central banks cutting interest rates.
"Equities will beat bonds in 2011, but I doubt we're in for a rise like 20-plus percent," Lynch said.
EURO ZONE WORRIES
Some analysts say the market's focus will return to the euro zone's problems.
Figures showed service sector growth slowed in December after activity in Ireland and Spain shrank, highlighting a two-speed regional recovery as business continued to expand in France and Germany.
Portugal's six-month borrowing costs soared from a previous auction in September.
European chemical shares were among the fallers, with the STOXX Europe 600 chemicals index down 0.8 percent on concerns about a slowdown in world demand.
Global chemicals market leader BASF fell 1.6 percent, with traders pointing to profit taking following a strong run. The stock had gained almost 22 percent since early October.
HSBC strategists remained upbeat. "The global bull market that began in March 2009 is approaching its second anniversary. We see nothing on the horizon to stop it yet," they said in a note.
"We think global earnings growth this year is likely to be close to the consensus forecast of 15 percent. Valuations are cheap: the forward PE for global equities is 12.3, whereas at the start of the third year of previous bull markets it averaged 18."
(Editing by David Hulmes)