* FTSEurofirst 300 up 0.6 pct
* Nestle lower as shares go ex dividend
* SAP underperforms after disappointing update
* Italian banks outperform on state plan hopes (ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). Adds details, updates prices)
By Danilo Masoni
MILAN, April 11 (Reuters) - European shares were higher on Monday, reversing earlier losses helped by gains in Italian banks and mining stocks.
The pan-European FTSEurofirst 300 index rose 0.59 percent to 1,311.81 points by 0820 GMT, after gaining 1.2 percent in the previous session. In spite of the gains the index is down almost 9 percent so far this year.
The Italian banking sector index rose sharply for a second straight session on hopes the Italian government will soon thrash out a plan to set up a state-backed fund to buy bad loans and plug capital shortfalls.
"Reports of a possible system-wide fund announcement this week are promising but we remain cautious until details are announced," UBS analysts said in a note.
Shares in Monte dei Paschi rose 8.8 percent, while UniCredit and Intesa Sanpaolo, the country's two biggest lenders, climbed 6 and 4 percent respectively.
Gategroup soared by 16 percent, boosted after China's HNA Group made an agreed offer for the Swiss airline catering group.
The STOXX 600 Basic Resource index rose 2.5 percent, making it the biggest sectoral gainer, after copper climbed on Monday from near its lowest in more than a month after middling U.S. wholesale inventories bruised the dollar. Shares in Anglo American, Glencore and Rio Tinto were all up more than 2 percent.
A weaker dollar makes commodities cheaper for buyers holding other currencies
SAP fell as much as 2.6 percent after the company warned that first-quarter results would be weaker than expected due to slower sales of software licenses to corporate customers, particularly in Brazil and the United States.
Exane BNP Paribas reiterated its "underperfrom" rating on SAP saying results were weak across the board.
"On a longer-term view, the growing volatility of licence sales in recent quarters casts some doubt on the bulls' assumption of secular mid-single digit licence growth," it said.
Shares in SAP were last down 0.1 percent.
Food company Nestle fell 3 percent, topping losers on the FTSEurofirst, as its shares went ex-dividend.
Shares in Daily Mail & General Trust were broadly flat after the Wall Street Journal reported that the parent company of Britain's Daily Mail newspaper was in talks with several private equity firms about a possible bid for Yahoo Inc .
Today's European research round-up
ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.
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Mike Dolan, Markets Editor EMEA. (Reporting by Danilo Masoni; Editing by Sudip Kar-Gupta and Toby Chopra)