* FTSEurofirst 300 down 0.1 as oil stocks plunge
* Lufthansa says profit to rise on lower oil prices
* Continental eyes sales growth pick-up
By Francesco Canepa
LONDON, Jan 12 (Reuters) - European shares gave away early gains to trade flat late on Monday, led by oil stocks as crude prices extended their slide to fresh 5-1/2 year lows.
The equity selloff, which started on Wall Street and quickly spread to Europe, mirrored a new plunge in the price of oil, with Brent crude setting a new low at $47.61/barrel as the U.S. trading day got underway.
Traders blamed a report by analysts at bank Goldman Sachs, who cut their three-month forecasts for Brent to $42 a barrel from $80.
"Goldman Sachs' report on oil has turned up in the hands of U.S. traders and here are the results," IG strategist Vincenzo Longo said.
The STOXX 600 Oil & Gas index was down 1.9 percent at 1527 GMT.
The broader FTSEurofirst 300 index of pan-European shares was down 0.1 percent at 1,347.66 points, off a daily high of 1,363.64.
Trading volume spiked during the dip, which saw the index trading as low as 1,342.96 points before paring losses
"It's already subsiding," the head of a trading desk said. "Our desk is for "sale" but the buy tickets from last week are all on pause so far this morning."
The oil slump had its winners, however.
German airline Lufthansa rose 1 percent in brisk volume after saying it expects the lower price of oil to cut its fuel bill for 2015 by 13 percent after the cost of hedging, setting it on course for a rise in profit this year.
"The tremendous oil price collapse is not adequately reflected in the airlines' share prices in my view," said Jochen Rothenbacher, research and sales director at Equinet Bank in Frankfurt.
"Historically, oil price collapses coincided with a weakening economy. This time it's different and the market has to learn that."
German automotive supplier Continental rose 1.3 percent after saying it expects sales growth to quicken to around 5 percent this year as global passenger car production rises moderately.
Investors are on tenterhooks ahead of next week's European Central Bank policy meeting, which may bring further stimulus measures, and a parliamentary election in Greece next week.
"Expect volatility to remain for the European stock markets in the near-term," said Hampstead Capital LLP hedge fund manager Lex van Dam.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up (Additional reporting by Sudip Kar-Gupta; Editing by Catherine Evans)