* FTSEurofirst 300 up 0.1 pct, hits new 6-1/2-yr high
* Pan-European index heads for 10th straight week of gains
* Shire surges more than 11 pct on takeover approach
By Atul Prakash
LONDON, June 20 (Reuters) - The pan-European FTSEurofirst 300 index reached a 6 1/2-year high on Friday as the drugmaker Shire rallied on a takeover offer, putting the index on track for a 10th straight week of gains.
Shire climbed 11.4 percent to 41.65 pounds after AbbVie confirmed it had made an offer to acquire it. Shire's board rejected the offer, saying it fundamentally undervalued the company and its prospects.
AbbVie said its final was worth 46.26 pounds a share, adding talks with Shire have ended. Shire has been seen as a prime takeover target for U.S. drugmakers, thanks to a mid-sized market value and its tax base in Ireland, where effective corporate tax rates are among the lowest in the world.
"M&A is going to be a big theme, especially in the pharma sector, in the second part of the year. A lot of companies have accumulated a lot of cash and are looking for interesting deals," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, said.
"The market has paused after a good week as some investors have taken profits, but we are in a bull market," Gijsels said. "It's a good environment for equities as economic outlook is improving and central banks generally have been quite supportive."
Shire added the most points to the FTSEurofirst 300 index , which was up 0.1 percent at 1,397.00 points at 1142 GMT. The index climbed to a 6 1/2-year high earlier in the session and has gained more than 6 percent so far this year.
On the downside, Norway's Telenor fell 1 percent after the country's trade minister said the government would ask parliament for the right to cut its stake in the telecom company and industrial group Kongsberg Gruppen.
France's state-controlled utility EDF fell 0.9 percent, down for a second day, as analysts at UBS and Natixis cut their target price after the government decided to scrap a planned increase in electricity prices.
"The 2013 re-rating of EDF was to a large extent driven by a change in investor perception, because the regulatory environment seemed to become more reliable and predictable," UBS analysts wrote in a note. "Therefore, the cancellation of the already agreed tariff hike could lead to an increased risk perception on lower regulatory visibility."
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up (Reporting by Francesco Canepa; Editing by Larry King)