Euro zone banks put a lid on rise in European shares

* FTSEurofirst 300 up 0.1 pct

* Index fell last week to lowest level since mid-Dec (Shanghai: 600875.SS - news) 2014

* Broker upgrades lift Ericsson (LSE: 0O86.L - news) , LVMH and CNP

* But Casino falls on bearish S&P note (Recasts, adds detail, quote)

By Alistair Smout

LONDON, Jan 18 (Reuters) - Euro zone banks weighed on European stocks on Monday after news that the European Central Bank was scrutinising some non-performing loans, although oil and gas companies supported the broader market.

The euro zone bank sector fell 2.5 percent, with traders citing news over the weekend that the ECB is quizzing a number of euro zone banks about non-performing loans as it ramps up efforts to tackle the region's mountain of bad debt.

Spain's Banco de Sabadell (Other OTC: BNDSF - news) , France's Credit Agricole and Portugal's Banco Comercial Portugues fell 4-6 percent.

Italy provided many of the sector's top fallers, with Banco Monte Paschi down 13 percent, and Banco Popolare (Amsterdam: PB8.AS - news) , UniCredit (EUREX: DE000A163206.EX - news) and Mediobanca (Milan: MB.MI - news) down 4-7 percent.

Italian banks outperformed their peers last year, but brokers are starting to turn more negative on the sector.

Bank stocks weighed on the euro zone-only Euro STOXX 50 , which fell 0.3 percent, underperforming the pan-European FTSEurofirst 300, up 0.1 percent at 1,298.63.

Some said that the ECB might act to provide more stimulus, given the 10 percent drop in European shares driven by weak oil prices and concerns over China.

"This week's ECB meeting might highlight that the ECB has some options available, we doubt that this will be sufficient to stop the downward pressure in the medium term," strategists at RBC (Other OTC: RBCI - news) said in a note.

The FTSEurofirst 300 edged up from its lowest level in more than a year, helped partly by a slight recovery in oil & gas firms.

Energy was the top sectoral riser, up 1.6 percent, after both Brent and U.S (Other OTC: UBGXF - news) . crude turned positive having hit their lowest levels since 2003 after sanctions on Iran were lifted.

Top climber overall was Adidas (Other OTC: ADDDF - news) , up 8.4 percent, after it appointed Henkel (Other OTC: HELKF - news) 's Kasper Rorsted as CEO. Henkel's shares fell 4.5 percent.

Mobile telecoms gear maker Ericsson rose 4.2 percent after Nordea Markets raised its rating on the stock to "buy.

Insurer CNP climbed after Nomura raised its recommendation on CNP to "buy" from "neutral", but French supermarket retailer Casino fell 7.5 percent after ratings agency Standard & Poor's threatened to downgrade its debt to junk status.

Today's European research round-up (Editing by Keith Weir and Sarah Young)