May 25, 2017 / 7:51 AM / a year ago

Buoyant banks lift European shares back towards 21-mo highs

LONDON, May 25 (Reuters) - European shares clung on to gains in early deals on Thursday helped by firmer banking shares and as corporate deals activity, after French aero firms Safran and Zodiac finally striking a deal, continued apace.

The pan-European STOXX 600 index rose 0.1 percent, on track for a third straight day of gains, helped by a rise among banks. Euro zone blue chips rose 0.3 percent.

Britain’s FTSE 100 was flat with heavyweight BT , down 1.8 percent, the biggest drag. Austrian and Nordic equity markets were closed for a holiday.

French aerospace supplier Zodiac gained 0.2 percent after accepting a reduced offer from aero engine maker Safran, following a series of profit warnings. Safran’s shares rose 1.1 percent.

A rise among banking stocks helped buoy bourses, following the release of the U.S. Federal Reserve’s minutes which suggested that an interest rate hike could be on the horizon, though this depended on the economy picking up.

Shares in BPER Banca, BBVA and Banco Santander were among the top banking risers, all up more than 1 percent.

Earnings were also in focus, with Britain’s Intermediate Capital Group jumping around 7 percent after its full-year results, and GVC Holdings also rose nearly 4 percent after a first-quarter update.

Oilfield services provider Petrofac slumped 16 percent to its lowest level in eight years and was the worst performer on the STOXX 600 after suspending its Chief Operating Officer Marwan Chedid amid a fraud investigation. (Reporting by Kit Rees, Editing by Vikram Subhedar)

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