European shares surrender gains after PMI data, ITV up

* FTSEurofirst 300 flat after early gains

* Euro zone PMI data below preliminary estimate

* Shares (Berlin: DI6.BE - news) in ITV (LSE: ITV.L - news) , Standard Chartered (HKSE: 2888.HK - news) advance

By Atul Prakash and Blaise Robinson

LONDON, March 4 (Reuters) - European shares surrendered early gains on Wednesday after the euro zone's Purchasing Managers' Index (PMI) came in below the preliminary estimate and as investors took some profits from recent multi-year highs.

Markit (NasdaqGS: MRKT - news) 's final February Composite PMI came in at 53.3, against a preliminary estimate of 53.5. A PMI covering the euro zone's dominant service industry rose one point from January to 53.7 but was lower than a flash reading of 53.9.

"There's some disappointment on the PMIs. In the past few weeks, the market enjoyed positive surprises on the macro front in Europe, which boosted investors' expectations," Saxo Bank trader Pierre Martin said.

"Today, it's the European figures that disappoint, but this comes after a mixed batch of data from the United States. When you combine slightly disappointing macro data with sky-high stock indexes, you get a correction."

The FTSEurofirst 300 index of top European shares was flat at 1,545.71 points by 1202 GMT after gaining as much as 0.5 percent to trade near this week's seven-year highs.

The STOXX 600 was also flat. It is up 13 percent so far in 2015 -- its strongest start to the year since the index was created in late 1986 and the best performance among all asset classes -- prompting a number of analysts and fund managers to warn about the risk of a correction.

"Tactically, Europe is in overshooting mode," Michael Riesner, head of equity technical analysis at UBS, wrote in a note. "The STOXX 600 is almost record high overbought, and in the last 40 years we had just two rallies with a similar steep shape, which was 1998 and 2000."

Investors also became cautious ahead of U.S. non-farm payrolls data on Friday that could provide clues about the timing of a Federal Reserve interest rate hike.

However, corporate news helped some companies to post significant gains. British broadcaster ITV rose 5.4 percent, the top gainer in the FTSEurofirst 300 index, after the group said it planned to return 250 million pounds ($385 million) to shareholders via a special dividend.

Standard Chartered rose 4.2 percent after saying it aimed to cut $1.8 billion in costs over three years and shrink its loan book in an effort to quell concerns about its capital strength.

But Norsk Hydro fell 7.4 percent on some cautious broker comments, with Goldman Sachs (NYSE: GS-PB - news) removing it from its conviction list and Bank of America ML cutting it to "underperform" from "outperform". (Editing by Mark Potter)