* FTSEurofirst 300 index gains 0.2 percent
* Standard Chartered dips on BofA Merrill Lynch downgrade
* China inflation data eyed on weekend
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By Joanne Frearson
LONDON, Dec 10 (Reuters) - European shares rose for the fifth session on Friday, with carmakers up as BMW gained on a positive broker note, while banks slipped after Standard Chartered was hit by a BofA Merrill Lynch downgrade.
However, gains were limited as investors remained cautious ahead of Saturday's Chinese November CPI figures, with analysts concerned a high reading could prompt the central bank to raise interest rates.
November Chinese import and export data came in stronger than expected adding to worries of further interest rate rises, while China's central bank on Friday announced it was raising lenders' required reserves by 50 basis points for the sixth time this year.
By 0959 GMT, the pan-European FTSEurofirst 300 index of top shares was 0.2 percent higher at 1,125.82 points after reaching its highest close since late September 2008 on Thursday.
"I don't expect the rises to last. Just because we have seen a lull in the euro zone debt crisis does not mean it is all over. I would be wary about the recent rises," Jeremy Batstone-Carr, head of equities at Charles Stanley said.
"We get Chinese inflation data tomorrow which is important for the market and I think we will see some rate hikes from China over 2011. It could take some of the heat out ... but overall I think China will avoid a hard landing."
Stronger-than-expected November Chinese import and export data has also led some analysts to believe the central bank could tighten monetary policy as soon as this weekend.
Commodity stocks reversed earlier session gains as investors worried about the possibility of slowing growth in China.
Antofagasta, Rio Tinto and Lonmin slipped 0.4 to 0.5 percent, but Anglo American was 1.4 percent higher after it announced will start building one of its biggest growth projects in Brazil early next year.
However, the index got some support from carmakers, recovering from the previous session's sharp losses when shares were knocked after traders on Thursday cited a report China may end tax breaks for passenger cars.
BMW gained 3.1 percent after Natixis raised its price target, while Porsche, Daimler and Continental gained 1.6 to 3.4 percent.
BANKS SLIP
Banking stocks featured among the worst performers, with the STOXX Europe 600 Banks down 0.8 percent. Standard Chartered fell 2 percent after BofA Merrill Lynch downgraded the Asia-focused bank to "neutral" from "buy".
Looking at individual stocks, Rolls Royce fell 0.6 percent after traders cited a story in the Financial Times which said the engineer could face costs of $500 million after the explosion of one of its engines on a Qantas Airbus A380 flight in November.
Later in the session investors will focus on the University of Michigan prelimary December consumer sentiment. Economists in a Reuters survey expect a reading of 72.5 compared with 71.6 in the final November report.
"It depends on the U.S. Michigan Consumer sentiment whether the market stays up. If it is higher then the rally will be extended as it clear evidence the jobs market could be turning," Heino Ruland, strategist at Ruland Research in Frankfurt, said.
Across Europe, the FTSE 100 index was down 0.1 percent, Germany's DAX was 0.6 percent higher and France's CAC 40 was up 0.2 percent. (Reporting by Joanne Frearson; Editing by Jon Loades-Carter)