* Pan-European FTSEurofirst 300 index up 0.5 pct
* Autos, miners among top gainers
* Greek shares in focus
By Atul Prakash
LONDON, May 18 (Reuters) - European shares advanced in choppy trading on Monday, with Volkswagen leading the automobile sector higher following an upgrade from a major bank and miners gaining on an improving sector outlook.
The pan-European FTSEurofirst 300 index was up 0.5 percent at 1,580.69 points by 0917 GMT. However, Italy's FTSE MIB index fell 0.9 percent as several companies in the index traded without the attraction of their latest dividend payouts.
The STOXX Europe 600 Automobile and Auto Parts index rose 1.4 percent, the top sectoral gainer, helped by a 2.4 percent rise in shares of Volkswagen after Deutsche Bank saw an upside from efficiency gains at the company and hiked its target price to 280 euros from 230 euros.
The STOXX Europe 600 Basic Resources index rose 0.8 percent, helped by a rise in prices of key industrial metals and an improved sector outlook on valuation grounds.
"The valuation of mining companies relative to the overall market is well below the average of the last 15 years and we think that the picture has started to improve. The sector is likely to outperform in an environment where the market is looking for cyclical plays," Christian Stocker, equity strategist at UniCredit in Munich, said.
Shares in BHP Billiton was up 2.9 percent in line with the broader market, after falling more than 5 percent in early trading after its spin-off South32 started trading with a market value of nearly $9 billion on Monday, a third below the top end of forecasts and underlining investor nerves about the outlook for the battered mining sector.
However, investors stayed cautious on the stock market's outlook following Greece's debt situation. The country is fast running out of cash and talks with its lenders have been deadlocked over their demands for Greece to implement reforms, including pension cuts and labour market liberalisation.
German politicians kept up the pressure on Greece over the weekend to implement reforms, with Economy Minister Sigmar Gabriel warning Athens in an interview that a third aid package would not be on the cards unless the Greeks made some changes.
Greece's ATG share index was down 2.5 percent.
"Market players are probably waiting for the Greek smoke to clear and some more visibility on the path of U.S. interest rates. This means that this market could be range bound for some time to come and market moves will be more on the individual stock and sector level," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, said. (Editing by Tom Heneghan)