(Reuters) - European shares were higher early Friday afternoon on hopes U.S. non-farm payroll data for December would show improving job market conditions in the world's largest economy.

The pan-European FTSEurofirst 300 index of top shares was up 0.5 percent at 1,018.30 points at 1216 GMT, after losing 1.4 percent in the past two sessions on worries about capital raising in the banking sector.

Volume was 26 percent of the 90-day average, with holidays in Austria, Finland, Greece and Sweden helping keep volumes low.

Gains were capped, however, with UniCredit continuing its slide for the second day on concern about the Italian bank's deeply discounted rights issue, .

UniCredit fell 12.1 percent to be the worst performer in Europe. The stock, which has lost a third of its value since Wednesday, is a reminder of the funding problems the sector faces due to the euro zone debt crisis.

There is no faith in European financials. There are still a lot of issues concerning funding and the market is punishing those impacted, said David Coombs, fund manager at Rathbone Brothers, which has $23.5 billion under management.

Although non-farm payroll figures are important and is helpful for sentiment and a good number will make shares rise, in Europe we still need to be careful. We are underweight financial equities.

Stocks which have large exposure to the United States were in the top performers lists on investor hopes non-farm payroll data would follow on from the better-than-expected private sector jobs data on Thursday.

Delhaize, which has two thirds of its business in the United States, rose 4 percent.

RBS, which has a buy stance on the Belgian sumpermarket group, said Delhaize is due to report its fourth-quarter 2011 sales on 12 January. We forecast total sales of 5,693 million euros ($7.3 billion), representing growth of 8.6 percent.

Support for the index was seen at its 23.6 percent Fibonacci retracement at 987.07 points of September to October rally, while resistance was at 1,028.48, its high from the rally.

The FTSEurofirst 300 index has come close to testing that October high twice this week.