European shares edge up and cling to 10-week high, H&M disappoints

* STOXX 600 up 0.1 pct

* H&M leads fallers as results disappoint

* Upgrade to `buy' boosts Balfour Beatty (Other OTC: BAFBF - news) (Adds closing prices)

By Danilo Masoni and Julien Ponthus

MILAN/LONDON, Sept 28 (Reuters) - European shares closed in mixed directions on Thursday but clung to a 10-week high as bullishness fuelled by President Donald Trump's tax cut plan lingered on despite concerns it might prove difficult to implement.

The pan-European STOXX 600 index was up 0.1 percent, just above the two-month high it reached in the previous session, which was lifted by the revival of "Trumpflation" trade - a bet on rising rates, inflation and securities prices in the United States and beyond.

"European markets have seen marginal gains today, as the optimism surrounding Trump’s tax plans seems to have run out of steam", wrote Joshua Mahony, a market analyst at IG (Frankfurt: A0EARV - news) , in a note to clients.

"It is hard to expect this proposal to pass Congress smoothly," said Takafumi Yamawaki, chief fixed income strategist at J.P. Morgan Securities.

On the corporate front, Fashion group H&M posted the worst performance of the STOXX 600, losing 5.1 percent.

The Swedish company reported a 20 percent fall in quarterly profit on Thursday as summer discounts squeezed margins, while sales slowed towards the end of this month.

The world's second-biggest fashion retailer after Zara, owner Inditex (Amsterdam: IT6.AS - news) has been struggling to keep up with rapid changes to its retail market as competition intensifies.

Ryanair also felt the heat after it cancelled flights of another 400,000 customers and scrapped a bid for Alitalia (Stuttgart: 2278962.SG - news) , falling 3.5 percent.

On the other side of the fence, a strong update lifted shares in food company SSP Group (Frankfurt: 83S.F - news) , up 5.7 percent , the highest rise in the index.

British infrastructure company Balfour Beatty also gained 5.6 percent following an upbeat note from Peel Hunt, which upgraded the stock to "buy".

Peel Hunt said the "hidden value" within infrastructure investments and strengthening balance sheet suggested there was scope for bigger shareholder returns over the medium term.

The rise in oil prices, spurred by tension around northern Iraq following the Kurdistan region's vote in favour of independence in a referendum, helped European majors, such as Total (LSE: 524773.L - news) or Royal Dutch Shell (LSE: 0LN9.L - news) , close higher - 0.23 and 0.73 percent respectively.

In the sector, TechnipFMC led France's CAC 40 after winning an engineering contract for Statoil (Hamburg: 1245893.HM - news) and adding 3.7 percent.

The heavyweight banking sector rose 0.1 percent, in line with seven-week highs, buoyed by expectations monetary policy will tighten. Gains in banking stocks were led by German lender Deutche Bank, up 2.7 percent. (Reporting by Danilo Masoni and Julien Ponthus, editing by Mark Heinrich)