European shares flat in early trade; Carrefour jumps

* FTSEurofirst 300 index flat

* Banks, drugs gain; autos fall on stronger euro

* Carrefour jumps on reassuring update

By Sitaraman Shankar

LONDON, Aug 29 (Reuters) - European shares showed little change early on Friday, with gains in drugmakers and banks offsetting losses in auto stocks and Vodafone , while a reassuring update boosted retailer Carrefour .

At 0828 GMT, the FTSEurofirst 300 index of top European shares was flat at 1,191.26 points, having traded in a narrow five-point range.

Banks gained, with Fortis up 1.6 percent, Natixis up 3.7 percent and Intesa Sanpaolo up 1.3 percent, though Commerzbank fell 2 percent on reports that it was set to buy Allianz's Dresdner unit.

UK mobile phone group Vodafone took most points off the index, with traders attributing its 1.2 percent fall to news mobile phone operators may face a European Commission crackdown on overcharging.

But Carrefour jumped 4.6 percent after it posted a rise in first-half operating profit and reiterated its 2008 targets.

U.S. stocks rose sharply on Thursday after news the U.S. economy grew at a surprisingly robust clip in the second quarter.

"The Q2 GDP numbers were driven by net exports, and of course were good but we need to see how and when housing markets stabilise," said Tuomas Komulainen, Helsinki-based strategist at Danske Market Securities.

Auto stocks were hit by a rise in the euro , with Daimler , Volkswagen , Peugeot and Renault falling 1 to 2.8 percent.

Across Europe, Britain's FTSE 100 .FTSE was flat, while Germany's DAX .GDAXI fell 0.2 percent and France's CAC .FCHI rose 0.1 percent.

NINE LOSSES OUT OF 10

On the last trading day in August, the FTSEurofirst 300 is flat on the month and even a small fall on the day will make it the ninth month of losses in the last 10. The index is down nearly 21 percent this year, hammered by bank writedowns, a slowing economy and uncertainty over interest rates.

Investor focus now shifts to eurozone inflation, unemployment and sentiment data at 0900 GMT.

"The eurozone inflation numbers should moderate and should be even lower in September and beyond due the impact of lower oil and the base effect," said Komulainen.

"The European Central Bank will stay tough because of the wage negotiations in Germany but hopefully should start taking the tone down," he added.

He said the central bank would, at some point, have to cancel out its July rate increase of 25 basis points, and he expected a softening in the rhetoric followed by a rate cut possibly early in 2009.

The ECB is due to announce its next rate decision on Sept 4.

(Editing by Quentin Bryar)