UPDATE 1-Stronger miners keep European shares around two-month highs
* FTSEurofirst 300 steadies around two-month highs
Miners buoyed by China newsflow, gold price
* Technical analysts see near-term consolidation
By Tricia Wright
LONDON, Aug 12 (Reuters) - European shares steadied around two-month highs on Monday, propped up by mining stocks after positive newsflow out of top metals consumer China, as investors awaited German economic data later in the week.
Heavyweight basic resources stocks advanced 1.2 percent after reassuring numbers on the Chinese economy last week.
The sector was also helped by a report in the South China Morning Post saying Beijing was quietly offering financial stimulus to key cities and provinces.
Mexican silver and gold miner Fresnillo, up 6.6 percent, and Randgold Resources, 2.5 percent firmer, were among the biggest gainers as gold hit its highest level in nearly three weeks.
The FTSEurofirst 300 closed up 0.45 point at 1,230.03, while the euro zone's blue-chip Euro STOXX 50 firmed 0.1 percent to 2,827.15 points.
With the summer holiday season fully underway and no significant macroeconomic data set for release until later in the week, volumes were thin, with trading on the FTSEurofirst 300 just 70 percent of its 90-day daily average.
German ZEW economic sentiment data, due at 0900 GMT on Tuesday, could confirm the euro zone's powerhouse economy is stabilising after narrowly avoiding a recession early this year.
"There's a chance that we could see an upside surprise, just on the basis that we've seen decent numbers out of the euro zone and out of the UK over the course of the last couple of weeks," CMC Markets trader Matt Basi said.
"Any significant beat could send us much higher on small volume but I think the likelihood is that an in-line number will see us just continue to drift sideways until bigger numbers later in the week."
German second quarter GDP data is due on Wednesday. A Reuters poll forecasts growth of 0.6 percent but a German government minister said on Friday it was likely to be 0.75 percent, its strongest rate in more than two years, although the pace of expansion would slow in the second half of 2013.
Investors will keep a close eye on U.S. data, with retail sales, consumer prices, housing starts, industrial production and surveys of regional manufacturing all due this week.
Strong numbers will increase the chances of a cut in the U.S. Federal Reserve's bond purchases, which have boosted equities in the past months.
The Euro STOXX 50 rose 0.5 percent last week, notching its fifth consecutive weekly gain. The index, which has jumped some 13 percent since late June, is trading within a whisker of two-year closing highs hit in May, at 2,835.
It recently hit 'overbought' territory, whereby its 14-day relative strength index (RSI) reading was at 70.
"It looks like resistance might be kicking in, although we'd need to see a close below the recent trading low at 2,775 to confirm that - after which the next area of possible support is going to be down at 2,750 or so," Charles Stanley analyst Bill McNamara said.