* FTSEurofirst 300 index gains 0.3 percent
* Portuguese bank stocks rise after country seeks bail out
* ECB interest rate decision eyed, rise expected
* For up-to-the-minute market news, click on
By Joanne Frearson
LONDON, April 7 (Reuters) - European shares hit a month's high on Thursday, led by financials after Portugal said it would seek financial aid, but traders were wary that the bailout may not signal the end of the euro zone sovereign crisis.
Portugal is the third euro zone country to seek a bail out and investors are now watching to see if Spain could be next, although the Spanish Economy Minister Elena Salgado ruled contagio.
By 0900 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.3 percent at 1,150.86 points after earlier hitting a month's high of 1,151.50 ahead of an interest rate decision by the European Central Bank.
"Portugal was so much expected," Lothar Mentel, chief investment officer at Octopus Investments, which manages 2.5 billion sterling ($4.07 billion) said. "Now there is more focus on Spain, the pressure is not really going to go away."
Mentel also said he expects there to be a shift towards value stocks from growth in the next half of the year if the global economies slow.
Banking stocks featured among the best performers, with the STOXX Europe 600 Banks index gaining 1.6 percent.
Portugal's Millennium bcp, Banco Espirito Santo and BPI gained 3.7 to 4.6 percent on the aid request and outperforming Portugal's PSI 20 which was 1 percent higher.
Elsewhere in the periphery, Spain's IBEX 35 was underperforming the broader FTSEurofirst index and was only up 0.1 percent recovering from earlier falls.
"We've seen some selling in Spanish banks" said a head of sales trading at a European investment bank. "Attention has just switched to the state of the property market in Spain, the amount of writedowns the banks need to take, and that they're not out of the water yet."
BBVA was up 0.6 percent, but underperforming the STOXX Europe 600 Banks index.
Elsewhere on the Spanish market, wind turbine maker Gamesa fell 3.2 percent after UBS downgraded it to "sell" from "neutral".
ECB/BOE EYED
Later in the session, investor attention will be on the ECB interest rate decision due at 1145 GMT.
A Reuters poll said the European Central Bank is likely to raise interest rates as it focuses on controlling inflation, though it will give few clues about when the next move will come, fearful not to hurt the euro zone's struggling peripheries.
"It looks like the market is pricing in a rise from the ECB," said Will Hedden, sales trader at IG Index.
Before the ECB rate decision, Britain's central bank has its announcement at 1100 GMT.
The Bank of England is likely to wait until the third quarter before hiking interest rates, with the consensus suggesting most Monetary Policy Committee members would want to see further evidence of the economy strengthening.
Across Europe, the FTSE 100 index was up 0.04 percent, Germany's DAX was up 0.01 percent and France's CAC 40 gained 0.2 percent. ($1=.6137 Sterling) (Additional reporting by Simon Jessop; Editing by Hans Peters)