LONDON, May 5 (Reuters) - European shares edged higher on Thursday on bargain hunting after a sharp sell-off in the previous session, but banks kept gains in check after weak earnings news from companies including Lloyds.
By 0717 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.2 percent at 1,136.45 points after falling 1.4 percent on Wednesday, hurt by weak U.S. economic data, concern over China's growth outlook and forecast-lagging company earnings.
"Yesterday's falls were quite sharp and I expect today there will be bottom fishing," Colin McLean, managing director at the 650 million pound Scottish Value Management in Edinburgh, said.
"We dislike the banking sector and Lloyds results will certainly impact UK banks today."
Banking shares featured among the worst performers. British bank Lloyds fell 5.4 percent after it said it will take a 3.2 billion pounds ($5.3 billion) provision to cover it for losses from the mis-selling of protection insurance and suffered another 1.1 billion hit in Ireland.
Investors were also nervous ahead of the European Central Bank interest rate decision, with the main focus on the conference afterwards which could give clues of future rate rises. (Reporting by Joanne Frearson)