* FTSEurofirst 300 down 0.5 percent; volumes thin
* German market shut; UK, France to close early
* Carmakers biggest gainers for 2010; banks biggest losers
* For up-to-the-minute market news, click on
By Harpreet Bhal
LONDON, Dec 31 (Reuters) - European shares were on track to post a 7.5 percent gain for 2010, although trading volumes dwindled by midday on Friday as several markets were closed for the year.
By 1142 GMT, the pan-European FTSEurofirst 300 index of top shares was down 0.5 percent at 1,122.85 points on volumes of just 18 percent of the index's 90-day trading average.
The German, Spanish and Swiss markets were shut for a holiday, while other major markets including the UK and France were due to close early.
The index is on track to gain 7.5 percent in 2010 and is up more than 74 percent from its lifetime low hit in March 2009, with several major economies having emerged from recession helped by stimulus from governments and central banks worldwide.
"It has been a good year for the markets because of the way markets have bounced back from the lows that we saw due to the European sovereign debt crisis," said Joshua Raymond, market strategist at City Index.
"We have rallied around 25 percent since the start of July which is a significant confidence booster."
Heavyweight banking stocks were on the back foot, with HSBC , Societe Generale and BNP Paribas down 0.7 to 0.9 percent on Friday.
Banks were the biggest fallers in 2010, with the STOXX Europe 600 banking index down around 11 percent. The STOXX Europe 600 Automobiles & Parts index showed the biggest rise, up around 45 percent. Copper hit yet another record high as the dollar weakened, but mining stocks slipped back, with BHP Billiton, Rio Tinto and Vedanta Resources down 1.2 to 1.8 percent on Friday. However, this comes at the end of a year in which the STOXX Europe 600 Basic Resources Index has risen more than 26 percent.
Market talk resurfaced that BHP was looking at a $40 billion-plus bid for Anadarko Petroleum, though banking sources said they were unaware of any imminent offer.
On the economic front, British house prices rose in December for the first time since May, according to mortgage lender Nationwide, providing reassurance that the property market is not falling off a cliff as it did in 2008.
Housebuilders Redrow and Bellway rose 1.5 and 1.4 percent respectively.
Investors will look to the Institute for Supply Management-New York index of regional business activity for December at 1330 GMT, for more fresh clues on the pace of economic recovery in the United States.
Across Europe, Britain's FTSE 100 was down 0.8 percent, while France's CAC40 fell 0.7 percent. (Editing by Erica Billingham)