Easing tariff fears buoy European shares; M&A, earnings in focus

* STOXX 600 rises hesitantly

* ACS gains after Atlantia confirms talks over Abertis

* Abertis shares down 3.8 pct

* Countrywide sinks 20 pct (Updates prices, adds detail)

By Helen Reid

LONDON, March 8 (Reuters) - European shares edged higher on Thursday, as dealmaking gathered pace and fears of a trade war eased, though some disappointing earnings updates weighed.

The pan-European STOXX 600 rose 0.3 percent by 0930 GMT, with defensive sectors leading the way while oil and materials stocks weighed amid signs the U.S. could make concessions over planned tariffs.

Merger and acquisition news drove big stock moves in Europe while benchmark-level trading was muted as investors awaited the outcome of a European Central Bank meeting later in the day.

Spanish construction firm ACS rose to the top of the index, up 9.3 percent after reports it was in talks with Italy's Atlantia to break up Abertis in an effort to avoid a bidding war for the highway concessions company.

Atlantia, which confirmed preliminary talks with ACS over Abertis, gained 3.8 percent, while Abertis fell 3.9 percent.

Shares in Hochtief, which had also bid for Abertis, rose 4.8 percent.

"It's positive news since instead of a bidding war there will be a division of assets and we'll get a fairer price and maybe better synergies," said Stefano Fabiani, fund manager at Italy's Zenit.

Another Milan-based fund manager said: "It's particularly good news for ACS/Hochtief since the market didn't like their offer because it increased leverage."

Renault shares fell to the bottom of France's CAC 40 after the French government said it was not prepared to sell its stake in the carmaker.

The stock had touched its highest since Dec 2015 on Wednesday after Reuters reported Nissan was in talks to buy the stake.

Earnings took their toll on some stocks.

French supermarket Casino dropped 5.8 percent after its results disappointed investors. The grocer said profit grew over 10 percent in France for the year, against market expectations for 14 percent.

A Reuters report that Amazon.com is preparing to sell electronics directly into Brazil, a key market for Casino, could also be weighing on the shares, a trader said.

Hugo Boss shares fell 4.9 percent after the German fashion house struck a more cautious tone on profit as it kept up investment in revamping stores and its website.

"There is likely to be some disappointment that improving sales momentum is still not dropping through to EBITDA, with the midpoint of FY18 guidance 5 percent below consensus," said UBS analysts.

A trader said the results set a worrying tone for the year given the stock's recent negative performance. "Same story as for most retailers as intensifying competition shows no sign of abating," he said.

Boskalis Westminster sank 10.6 percent, the worst STOXX 600 performer, after the construction and engineering firm reported full-year earnings and said it would be a "challenge" to match 2017 results.

Axel Springer sank 10 percent after results triggered profit taking.

While auto and supplier stocks continued to underperform, having been the worst-hit by fears the U.S. tariff threat, Sweden's Saab jumped 6.6 percent after SEB gave the stock a 'buy' rating. (Reporting by Helen Reid, Additional Reporting by Stephen Jewkes, Editing by Danilo Masoni and John Stonestreet)