* FTSEurofirst 300 up 0.7 pct; up 2.5 pct this week
* Volumes low due to public holiday in Europe
* BHP set to spin off unwanted assets; mining sector gains
* Lufthansa up on report German air tax could be scrapped
By Tricia Wright
LONDON, Aug 15 (Reuters) - European shares rose on Friday, gaining ground for the fourth time in five sessions, helped by BHP Billiton after the world's biggest miner said it could spin off assets.
Shares in BHP advanced 2.8 percent after the group confirmed its preference for a demerger of unwanted aluminium, manganese and nickel assets.
Mining firms have been shedding assets in recent years in a bid to boost profits in the face of falling commodity prices, strengthening the investment case for the sector.
"(Capital expenditure) discipline is something that's very important I think to see share price performance... It is encouraging for the sector overall," James Butterfill head of equity strategy at Coutts, said.
Other mining stocks rose, with Rio Tinto up 1.5 percent and Anglo American up 1.2 percent.
Conciliatory comments from Russian President Vladimir Putin on Thursday have helped ease worries over the Ukrainian conflict.
But despite Putin's remarks, tensions remained high between Russia and Ukraine. Dozens of heavy Russian military vehicles massed on Friday near the border with Ukraine.
"It's still quite tense in Ukraine, but the market is getting used to it," a Paris-based equity and exchange-traded fund trader said.
"Indexes are in a technical bounce from the July sell-off, and they should remain range-bound today due to the public holiday in many countries."
At 1118 GMT, the FTSEurofirst 300 was up 0.7 percent at 1,338.47 points.
Trading volumes were relatively subdued on Friday due to a public holiday in a number of European countries, although stock markets remained open across the region, apart from a few countries including Italy and Greece.
By mid-session, the FTSEurofirst 300 had traded around 40 percent of its 90-day daily average.
The benchmark was set to post its biggest weekly gain this year, up 2.5 percent, bouncing back from a sharp pull-back started in late June that had been sparked by fears of escalation in the Ukrainian conflict as well as Western sanctions against Russia.
Shares in German airline Lufthansa also notched up good gains, ahead 2.3 percent.
German business daily Handelsblatt reported that politicians from the conservative CDU and centre-left SPD parties will ask the federal transport minister to come up with a proposal that will see the air traffic tax in Germany being scrapped. German airlines say the tax costs them around 1 billion euros a year, with the lion's share being paid by Lufthansa.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up (Editing by Toby Chopra)