* FTSEurofirst 300 up 0.2 pct
* Engine deal helps Rolls and Airbus
* European equities still set to snap weekly winning run
* Barclays bounces after lawsuit falls
By Alistair Smout
EDINBURGH, June 27 (Reuters) - European shares edged higher on Friday, supported by gains in British engine maker Rolls-Royce but still set for their first weekly loss since April.
Rolls-Royce rose 1.4 percent, one of the FTSEurofirst 300's biggest gains, after Reuters exclusively reported that Airbus is close to deciding to upgrade its A330 with engines from the UK-listed company. Airbus also rose 1.4 percent, to the top of France's CAC 40 index.
"It's a shame that this has happened in such a subdued market, because we could probably see Rolls-Royce up a bit stronger than this," said Matt Basi, senior sales trader at CMC Markets, said. "They're only up just over a percent but this feels like a good news story at a time when they need one.
"For Airbus, it's a step in the right direction too."
The gains for Rolls-Royce and Airbus helped the FTSEurofirst 300 rise 0.2 percent to 1,373.52 by 0740 GMT, although the rise still left it down 1.8 percent for the week.
The index looks set to snap a 10-week winning streak, its longest since the middle of 2012. The advance has been hindered in part by economic data from the United States that fell short of forecasts.
"A lot of this week's fall has stemmed from the poor economic data we saw out of the US," said Neil Wilkinson, European fund manager at Royal London Asset Management. "There are a lack of positive triggers... it's no surprise to see some pauses during an upward trend."
The FTSEurofirst 300 closed down 0.1 percent at 1,370.38 on Thursday, retreating further from the 6 1/2-year high it reached last week after U.S. Federal Reserve official James Bullard suggested the U.S. economy would be strong enough to bear a rate rise in early 2015.
The comments came despite weak U.S. consumer spending data, which prompted a cut in growth forecasts and hit global stocks.
Barclays staged a recovery in volatile trade after falling 6.5 percent on Thursday. Some traders bought back into the stock at 18-month lows after the United States sued the UK bank over practices in its "dark pools" business.
The bank traded as much as 2.5 percent higher, before paring gains and rising 1.1 percent.
Analysts at Citi pointed to the "negligible" revenue contribution of dark pools to Barclays, saying the impact on the rest of the equities business should be limited so long as any fine is proportionate.
"I wouldn't be a keen buyer of the stock until we know more detail about what's going on. To say it's not meaningful because of its small revenue contribution is disingenuous, as it is reputational damage that also counts," CMC's Basi said
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
Editing by Larry King