European shares inch up as investors assess outlook for Trump plans

* STOXX up 0.3 percent

* Eyes on U.S. healthcare bill vote

* Sectoral indexes show small moves

* Next (Frankfurt: 779551 - news) rises after earnings update (Adds details, updates prices)

By Danilo Masoni

MILAN, March 23 (Reuters) - European shares inched higher on Thursday as investors assessed the risks to Donald Trump's stimulus plans, just before a vote in Congress on U.S. president's healthcare bill.

The pan-European STOXX 600 index was 0.3 percent, following losses in the previous three sessions, while Britain's FTSE underperformed after surprisingly strong retail sales data boosted the pound.

The U.S. vote, which could come as early as Thursday, is seen as a litmus test of Trump's ability to push through legislation, including more market sensitive plans to cut tax, boost spending and deregulate banks.

"Investors will have to wait for the outcome of today's vote for the market's next move," said Peter Rosenstreich, head of market strategy at Swissquote Bank in Geneva.

"So far, the market has hyped this event as being a test of U.S. President Trump's policy agenda, suggesting that a defeated healthcare bill would translate into barriers for the much-awaited tax reform policy and broader pro-growth agenda."

Expectations of a big economic stimulus in the world's largest economy have helped fuel a global rally in equity markets, lifting the STOXX to 15-month highs earlier this week, so any policy disappointment could fuel more losses.

Sectoral indexes were showing small moves, between a 0.4 percent fall and a 0.9 percent rise, underlying the overall cautious mood. Yet some investors said they were upbeat about prospects for European equities despite political risks and that Trump fears were overdone.

"I have the sensation that investor interest in Europe remains strong and that a part of the market remains underweight pending the outcome of the French vote," Consultinvest fund manager Enrico Vaccari said, referring to the French presidential election on April 23 and May 7. "That suggests there is fuel left for the rally to continue."

Deutsche Bank (IOB: 0H7D.IL - news) on Thursday said it had "underweight" positions on Germany and France. Strategists at the German bank said a victory for far-right French leader Marine Le Pen (Other OTC: PENC - news) in the presidential election was the biggest risk for the French market, although current opinion polls show Le Pen as likely to lose to centrist candidate Emmanuel Macron.

France's blue chip CAC index was up 0.3 and Germany's DAX rose 0.5 percent.

Among individual stock movers on Thursday, Halma rose 6.8 percent, leading gainers on the STOXX index, after the safety and medical company reported strong orders growth.

Next was another outstanding gainer, up 6.4 percent.

The British clothing retailer reported a first drop in annual profit since 2009 and said it was "extremely cautious" about prospects for the year ahead but its battered shares rose on relief that the outlook has not deteriorated further.

On the downside, Dutch digital security services firm Gemalto (LSE: 0OGA.L - news) fell 4.3 percent, extending losses after Wednesday's profit warning as several brokerages cut their ratings on the stock.

IG Group fell 4.5 percent, topping STOXX losers, after the British online trading firm posted a fall in quarterly revenues caused by weakness in UK and Ireland (Other OTC: IRLD - news) . (Reporting by Danilo Masoni; Editing by Tom Heneghan)