* Pan-European index up 0.8 pct, down 4.5 pct so far this week
* Miners, autos lead gains as China rebound soothes mood
* Tesco boosted by upgrade
* ARM among top losers after warnings from Apple suppliers (Adds details)
By Danilo Masoni
MILAN, Jan 8 (Reuters) - European shares inched higher on Friday, steadying a little after this week's sell-off on concerns over China, where stocks climbed after Beijing halted use of a new circuit breaker mechanism.
The pan-European FTSEurofirst 300 was on track for its steepest weekly drop since late August, however, when markets were similarly hit by worries over China, the world's second-largest economy.
By 0905 GMT, the FTSEurofirst 300 index was up 0.8 percent but was still on track for its steepest weekly drop since late August. The euro zone's blue-chip Euro STOXX 50 index also advanced by 0.7 percent.
China's major stock indexes rose sharply on Friday after Beijing stopped using a new circuit breaker mechanism that had halted trading twice this week and had been blamed for exacerbating the sell-offs it was designed to limit.
Some investors said that China's ability to manage its markets has been badly damaged and that more action is needed to see any rebound gaining strength.
"Markets will be waiting to see the Chinese government's determination to prop up the stock market and the currency into next week before any major recovery rally is likely to be seen," said IG's market analyst Angus Nicholson.
Mining stocks were among the main beneficiaries of the rebound after steep losses in the previous session, with London-listed Anglo American, Glencore and BHP Billiton up between 1.4 percent and 4.1 percent. Miners are particularly sensitive to the state of the Chinese economy, as China is the top global consumer of metals.
Carmakers, for whom China is a key overseas market, rose nearly 2 percent to top the sectoral gainers. But Fiat Chrysler slipped 1.2 percent after Soc Gen downgraded the stock to sell and JP Morgan reduced its price target.
Chipmakers ARM Holdings AMS and Dialog Semiconductor underperformed, with falls of between 0.7 and 1.7 percent, after warnings from the Apple suppliers Cirrus Logic and Qorvo.
Cirrus Logic and Qorvo on Thursday added to growing worries about slowing shipments of the iPhone 6S and 6S Plus by cutting their revenue estimates for the third quarter.
Among outstanding gainers, Tesco rose 5.5 percent and was the top gainer among Britain's blue chips after Barclays upgrades the food retailer to "overweight" from "equal weight".
Barclays says recent underperformance has left Tesco's valued attractively and its trading statement, expected next week, may not be as bad as market expects despite numerous headwinds facing the UK food retail market.
The FTSEurofirst 300 index is down 4.5 percent so far this week, and is down nearly 17 percent from its 2015 peaks reached in April.
Today's European research round-up (Editing by Hugh Lawson)