Europe shares hold steady, Bouygues up on merger hopes

* FTSEurofirst 300 down 0.1 pct, Euro STOXX 50 down 0.1 pct

* Bouygues (Other OTC: BOUYF - news) outperforms on hopes of tie-up with Orange (Other OTC: FNCTF - news)

* Market in wait-and-see mode -fund manager

By Lionel Laurent

LONDON, May 16 (Reuters) - European stocks held broadly steady in early trade on Friday, with investors in wait-and-see mode as a gloomier economic picture in Europe and dented risk appetite balanced M&A enthusiasm in the telecoms sector.

French industrial and telecoms conglomerate Bouygues (Frankfurt: BYG.F - news) was a sharp outperformer, rising 3.7 percent on speculation about a possible tie-up with Orange, whose shares rose 1.2 percent.

But benchmark national indexes in Europe were broadly flat to lower at 0743 GMT as traders weighed the mixed economic environment in Europe against the possibility of future central-bank intervention that would support equity markets.

"The market is in a wait-and-see mode," said Francois Chaulet, head of Paris-based Montsegur Finance. "Interest rates have never been so low...There needs to be some other catalyst, which will most likely come from the central banks."

The pan-European FTSEurofirst 300 index was 0.1 percent lower, at 1,355.60, with Germany's DAX index and the Paris CAC-40 also down 0.1 percent after recording its steepest daily fall since late March on Thursday on the back of disappointing GDP data.

The Euro STOXX 50 index of euro-zone blue-chip stocks was down 0.3 percent.

Over the past week, European indexes have been boosted by speculation the ECB may cut rates and announce other measures at its June meeting. The central bank has said any move would depend on economic data, putting the euro zone GDP figures and inflation figures under scrutiny.

"Markets are vulnerable because growth expectations are a little bit too high," said Michael Hewson, chief market analyst at CMC Markets UK. (Editing by Toby Chopra)