European shares had drifted lower by midday of the last trading day of the month after surging in the prior session on U.S. GDP data, as falling energy stocks, hit by weaker crude prices, offset gains in financials.

At 1300 GMT on Friday, the FTSEurofirst 300 .FTEU3 index of top European shares was down 0.2 percent at 995.70 points, having risen 1.8 percent in the previous session. The benchmark is up more than 54 percent from its lifetime low in March.

The index rebounded on Thursday from a three-week low, boosted by news that the U.S. had emerged from recession, underscoring investors' confidence on the prospects for an economic recovery.

Energy stocks were among the top losers as crude prices CLc1 slipped below $80 a barrel. Total (TOTF.PA), ENI (ENI.MI), BP (BP.L) and Royal Dutch Shell (RDSa.L) fell between 0.3 and 1 percent. The DJ STOXX European Oil & Gas Index .SXEP was down 0.5 percent.

The European index spent most of the morning session moving between positive and negative territories, with investors trading cautiously on the last business day of the month.

I think trade will remain directionless until we get more macro data from the United States, said Roger Peeters, strategist at Close Brothers Seydler.

There are no real triggers in today's market following the really busy day we've seen on Thursday.

Banks were among the top gainers, with Standard Chartered (STAN.L), HSBC (HSBA.L), Barclays (BARC.L), Societe Generale (SOGN.PA) and Credit Agricole (CAGR.PA) rising 0.2 to 1.8 percent.

Lloyds Banking Group (LLOY.L) was up 2.5 percent, benefiting from plans to raise capital as an alternative to a government-backed scheme to insure bad debts, prompting Credit Suisse and Exane BNP Paribas to up their ratings.

ALCATEL DROPS

Telecommunications gear maker Alcatel-Lucent (ALUA.PA) fell 8.1 percent after posting its twelfth straight quarterly net loss, hit hard by telecoms operators' sharp cutbacks in network investments. 

Disappointing topline, down 11 percent year-on-year at constant currency, reflecting the cyclical weakness we know and we've seen across the industry this quarter, Bernstein analyst Pierre Ferragu said.

Telecom stocks fell on the news, with the DJ STOXX European Telcom Index .SXKP as the second-biggest sectoral decliner, down 0.5 percent, while Deutsche Telekom (DTEGn.DE), Vodafone (VOD.L) and Telecom Italia (TLIT.MI) were between 0.5 and 1.3 percent lower.

On the upside, pharmaceutical stocks advanced, and the DJ STOXX European Health Care Index .SXDP was 0.3 percent higher, after Sanofi-Aventis (SASY.PA) raised its outlook for 2009 thanks to sales of swine flu vaccine. [ID:nSP443666]

Across Europe, Britain's FTSE 100 index .FTSE rose 0.2 percent, while Germany's DAX .GDAXI and France's CAC 40 .FCHI fell 0.5 and 0.3 percent, respectively.