European shares drifted higher Friday on expectations that some political developments in highly indebted Italy and Greece could pave the way for tough austerity measures that are crucial to contain the region's two-year-old debt crisis.

The Italy's Senate is set to vote on the package later in the day, with former European Commissioner Mario Monti emerging as favorite to replace Prime Minister Silvio Berlusconi. In Greece, Prime Minister-designate Lucas Papademos will name a new crisis cabinet to roll out austerity plans.

A successful Italian bond auction and a sense that much needed political change is progressing appears to be aiding sentiment, Keith Bowman, equity analyst at Hargreaves Lansdown, said.

In the background, supportive U.S. economic data and a broader conclusion that the third quarter corporate results season was by no means a disaster also appears to be playing its part.

At 0818 GMT (3:18 a.m. ET), the FTSEurofirst 300 <.FTEU3> index of top European shares was up 0.5 percent at 968.08 points after falling in the previous two sessions. Banks featured among the top gainers, with the sector index <.SX7P> up 1.1 percent.

(Reporting by Atul Prakash)