* FTSEurofirst 300 index closes up 0.2 percent
* E.ON, RWE gain on hopes for more nuclear profits
* Natixis up on CAC-40 inclusion
By Brian Gorman
LONDON, Sept 6 (Reuters) - European shares edged higher on Monday, adding to a strong rally last week, with utilities rising after Germany extended nuclear power plants' lifespans, but in low volumes with Wall Street closed.
Drugmaker GlaxoSmithKline was among shares falling, on concerns about its Avandia drug.
The pan-European FTSEurofirst 300 index of top shares rose 0.2 percent to 1,065.80 points, the highest close since Aug. 9, after rising 3.6 percent last week.
"The markets might go slightly higher, but it is not a great week for economic data or corporate news," Jeremy Batstone-Carr, strategist at Charles Stanley, said.
"It is fair to say equity yields, compared with bond yields, are very attractive. But yields and prices are where they are because investor sentiment has been on the back foot. The probability of a double dip in Europe is close to 50 percent."
The index moved in a range of just 5.36 points over the session -- trading was thin as U.S. markets remained closed for a public holiday. Volume on the index was just 39.5 percent of its 90-day daily average.
Utilities featured among the top movers. German companies E.ON and RWE both rose 1.8 percent on hopes for billions of euros extra profit from a decision to extend the lifespans of nuclear power plants in Europe's biggest economy.
Other utilities to gain include French group GDF Suez, up 1.3 percent.
Sentiment among traders remained positive after markets were given a boost on Friday's news U.S. employment fell less than expected in August and private hiring surprised on the upside. "We are having a more appropriate response to the some of the news flow which has actually been quite good," said Mike Lenhoff, chief strategist at Brewin Dolphin. "Though there is not a lot to look forward to."
"The earnings season is now behind us and there still is the open issue that the Fed might re-engage in quantitative easing, although the employment figures were better than expected they were still not great."
GlaxoSmithKline fell 1.5 percent after British drug regulators said the company's diabetes drug Avandia should be pulled from sale because of concerns about heart risks.
Across Europe, the FTSE 100 ended the day 0.2 percent higher; Germany's DAX and France's CAC 40 both rose 0.3 percent.
NATIXIS RISES
French bank Natixis rose 5.9 percent after NYSE Euronext said it would enter the CAC 40 index. Dexia, which is dropping out of France's blue chip index, fell 2.3 percent.
Veolia Environnement gained 3.3 percent after Citigroup upgraded the world's biggest water and waste management group to "buy" from "sell".
BP gained 1.2 percent after the top U.S. official overseeing the response to the Gulf of Mexico oil spill said on Saturday the ruptured well was secure with no threat of spewing crude again.
Morgan Stanley said it saw 30-50 percent upside potential in the British oil company while, separately, the Financial Times reported BP had revived the sale of its Alaskan assets.
The Euro STOXX 50, the euro zone's blue-chip index, rose 0.3 percent to 2,753.60 points. The index stayed above its 50 percent Fibonacci retracement of a fall to a low in May from a high in April, seen as a positive sign. (Additional reporting by Joanne Frearson; Editing by Dan Lalor)