European shares set to end positive month on uncertain note

* STOXX flat, up for fourth month in a row

* Italian banks led lower by Carige

* Activist investor move boosts Ericcson

* Retailer Metro drops as results disappoint (Adds details, updates prices)

By Danilo Masoni

MILAN, May 31 (Reuters) - European shares were set to rise for a fourth month in a row on Wednesday but fresh political worries and the end of a strong earnings season left investors searching for new catalysts.

The pan-European STOXX 600 index was down 0.05 percent by 0930 GMT, set to end May with a rise of 0.8 percent, while euro zone blue chips were also little changed.

In Britain, the FTSE rose 0.2 percent, helped by a weaker pound which fell after a new poll showed Britain risks a hung parliament following a June 8 national election.

The STOXX remains close to 21 month highs hit earlier in May, having gained 26 percent from last year's lows as a wave of inflows poured into the region, lured by double-digit earnings growth, solid macro data and easing political fears following a market friendly outcome of the French presidential vote.

But the rally has lost steam in the last couple of weeks as stock valuations lost attractiveness and worries over early autumn elections in Italy and the looming election in the UK soured sentiment.

"It's trivial to recall that markets don't like political uncertainty and anticipating it is an inevitable excuse to take profits," said JCI Capital fund manager Alessandro Balsotti.

Italian blue chips, which suffered a heavy sell-off earlier this week on growing expectations the euro zone country may hold early elections, were down 0.4 percent.

Italian banks, also hit by concerns over the rescue of two regional lenders, were down 1.1 percent, hovering around their lowest levels in more than one month.

Among Italian lenders, Carige fell around 7 percent as a row over the company's management fuelled worries that its recapitalisation plans could be delayed.

On the broader market, the Basic Resources (Frankfurt: W8Z.F - news) index, where major mining companies are listed, was the biggest sectoral faller, dropping 1.7 percent.

The move tracked a fall in copper prices which contracted on profit taking after rising earlier in the session on better-than-expected manufacturing data from China.

Among top gainers, Ericsson (Hanover: ERCB.HA - news) rose 4.5 percent, after Cevian Capital bought a stake of more than 5 percent, saying it saw significant potential in the Swedish firm.

Cellnex soared 4.9 percent after a Bloomberg report said that American Tower may bid. Cellnex said its management has had no contact with American Towers.

Metro (Dusseldorf: 62M.DU - news) was a top loser, down 2 percent, after the German retailer reported results showing a loss at its consumer electronics division. (Reporting by Danilo Masoni; Editing by Louise Ireland and Pritha Sarkar)