* FTSEurofirst 300 down 0.4 pct, Euro STOXX 50 up 0.7 pct
* Mining, industrials sag after U.S. downgrade
* Peripheral banking shares surge as ECB buys bonds
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By Blaise Robinson
PARIS, Aug 8 (Reuters) - European stocks were mixed on Monday following a dismal week, as the European Central Bank's move to buy Spanish and Italian bonds to halt contagion from the euro zone debt crisis offset the U.S. credit downgrade by S&P.
The Thomson Reuters Peripheral Eurozone Banks index , which plummeted 14 percent last week, surged 5.2 percent in early trade, with Banco Popolare up 8.7 percent and UniCredit up 6.6 percent.
The European Central Bank said on Sunday it would "actively implement" its bond-buying programme, signalling it would buy Spanish and Italian government bonds to stem contagion from the euro zone debt crisis.
"There's a bit of relief from the ECB using heavy artillery. It might save the day, but problems aren't solved in the long term," a Paris-based trader said.
At 0837 GMT, the FTSEurofirst 300 index of top European shares was down 0.4 percent at 971.47 points, while the euro zone's blue chip Euro STOXX 50 index gained 0.7 percent at 2,391.69 points.
Spanish and Italian government bond yields retreated, with traders saying the central bank had stepped up its programme of bond purchases to include debt issued by Italy and Spain, boosting the euro currency .
But cyclical stocks such as miners and industrials lost ground as investors fretted about the impact of the U.S. credit downgrade on global growth.
Rio Tinto fell 2.1 percent, Siemens
Around Europe, UK's FTSE 100 index was down 0.2 percent, Germany's DAX index down 0.8 percent, and France's CAC 40 down 0.2 percent.
"European indexes have broken below key support levels on Friday, and all eyes are now on the S&P 500. It hasn't yet hit the target of 1,150 points stemming from its recent triple top, so I would sell into today's rebound," said Valerie Gastaldy, head of Paris-based technical analysis firm Day By Day.
"It may take a few days before the S&P 500 hits the target, but it should come."
The slide in European banking shares since February has dragged bank valuation ratios to levels not seen since the heat of the financial crisis in early 2009.
The beaten-down STOXX bank index trades at 7.7 times 12-month forward earnings, below a 10-year average of 10.9, while the average price-to-book ratio has fallen to 0.76, versus a 10-year average of 1.38. (Reporting by Blaise Robinson; Editing by Hans-Juergen Peters)
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