European shares steady, helped by Nestle, energy stocks

* STOXX 600 ends flat, near 10-week high

* Nestle (Swiss: NESN.VX - news) gains after setting profitability target

* Adidas (IOB: 0OLD.IL - news) drops after employee arrested in U.S.

* Energy sector finds support in crude prices (Recasts, adds details, closing prices)

By Danilo Masoni and Julien Ponthus

MILAN, Sept 26 (Reuters) - European shares steadied on Tuesday, helped by gains in some big oil stocks and Nestle after the food giant positively surprised investors by setting margin targets for the first time.

Investors remained cautious however as tensions over North Korea persisted and while they awaited further clues on whether U.S. interest rates will rise in December.

Hints on the future trajectory of rates could emerge after market close (1645 GMT) when Federal Reserve Chair Janet Yellen gives a speech on inflation and monetary policy in Ohio.

The pan-European STOXX 600 ended little changed, near 10-week highs hit in the previous session, while Germany's DAX added 0.1 percent and Spain's IBEX fell 0.3 percent.

Big oil firms Royal Dutch Shell (LSE: 0LN9.L - news) and Eni (Euronext: ENI.NX - news) rose 1 percent and 0.4 percent respectively as gains in crude prices cemented hopes that the worst performing sector in Europe so far this year could finally offer some upside.

"Over the last few years, big oil (companies) have slowly but surely been preparing for a lower-for-longer oil price environment," William Hamlyn, investment analyst at Manulife Asset Management, said.

"They're now in a position where they can generate cash flow and hand it back to shareholders rather than just blowing it on frivolous projects," he added.

The energy sector, which Citi upgraded to overweight on Monday, turned negative in afternoon trading after crude oil prices succumbed to profit-taking after hitting 26-month highs earlier in the session.

Nestle provided the biggest uplift to the STOXX by a single stock, rising 1.8 percent.

The world's largest packaged food company set a profit margin target for the first time, responding to an industry slowdown and pressure from activist investor Third Point for near-term returns from the group.

"Nestle screens as the third most underweight stock in developed Europe... and we think accelerating earnings momentum will win over the sceptics," UBS (LSE: 0QNR.L - news) analysts led by Pinar Ergun said as they welcomed the new "ambitious but sensible" targets by confirming their buy rating on the stock.

Adidas was a weak spot, down 2.4 percent. U.S. prosecutors on Tuesday charged 10 people including James Gatto, director for global sports marketing for basketball at the sportswear group, with bribery and fraud in connection with college recruiting.

Adidas confirmed the arrest of an employee.

On the M&A front, German industrial group Siemens (Berlin: 29783751.BE - news) , which may decide on Tuesday to pursue a multibillion-dollar rail merger with rival Alstom (LSE: 0J2R.L - news) was flat and its possible French suitor rose 0.6 percent.

Elsewhere, Carrefour (LSE: 0NPH.L - news) rose 3.5 percent on vague market talk of a possible takeover bid from Amazon. The French retailer declined to comment.

Among outstanding losers were shares in AA (Frankfurt: A116XA - news) , down 10.7 percent to an all time low after the British motoring group announced it would have to raise capital expenditure.

British lender Close Brothers (LSE: CBG.L - news) fell 6.8 percent after it warned shareholders that Brexit would have a long-term impact on its customers while wider markets remain "uncertain". (Reporting by Danilo Masoni; additional reporting by Sudip Kar-Gupta; Editing by Adrian Croft)