European shares flat early; banks boosted by easier rules

PARIS, Jan 7 (Reuters) - European shares were flat early on Monday, taking a breather from their New Year rally, buoyed by gains in banking stocks on the back of a regulatory decision to ease new liquidity rules for the sector.

At 0805 GMT, the FTSEurofirst 300 index of top European shares was flat at 1,167.31, while UK's FTSE 100 index was down 0.2 percent, Germany's DAX index down 0.3 percent, and France's CAC 40 down 0.1 percent.

On Sunday, the Basel Committee of banking supervisors said they will give banks four additional years and more flexibility to build up cash buffers, allowing lenders to put some of their reserves to work, which should boost economic growth.

"Even though it was expected, it's still a pretty good news. It will give the banks and the economy much-needed breathing space," a Paris-based equity and exchange-traded fund (ETF) trader said.

Societe Generale was up 3.6 percent, BNP Paribas up 2.2 percent and Commerzbank up 1.5 percent.