European stock markets hover near multi-year highs

* FTSEurofirst 300 flat, hovers just below 7-year high

* $5.8 bln inflows to European equities -BoAML

* Politicians gather for new attempt on Greek deal

* Europe enjoying best earnings season in 3-1/2 years

By Sudip Kar-Gupta and Blaise Robinson

LONDON/PARIS, Feb 20 (Reuters) - European stock markets steadied near multi-year highs on Friday, as euro zone finance ministers prepared another attempt at reaching a deal on Greece.

At a crucial Eurogroup meeting in Brussels, they will try to break a deadlock over Athens's urgent need for further financing, but it may take an emergency summit of the currency bloc in the coming week to clinch any deal.

With EU paymaster Germany and Greece's new radical leftist-led Syriza government digging their heels in over demands that Athens stick to strict austerity conditions in its international bailout programme, the two sides seemed far apart hours before the meeting.

The Greek stalemate also overshadowed data pointing to growth in Germany and France.

Nevertheless, Athens' benchmark ATG equity index edged up 1 percent, with the index up by around 20 percent from low points reached in late January after Syriza won power. The Greek banking index rose 2.6 percent.

The pan-European FTSEurofirst 300 index was flat, remaining near seven-year highs. Germany's DAX slipped 0.2 percent to 10,975.34 points but also remained close to a record high of 11,022.26 points hit earlier this month.

Many investors were still betting on a deal on Greece, and Bank of America Merrill Lynch said in a research note that European equities saw $5.8 billion of inflows this week.

"I think there is going to be a resolution on Greece. We're not favouring the scenario of Greece exiting the euro zone," said Thames Capital Markets' chief market strategist Nav Banwait.

"In the short term, we may be consolidating around these levels, but in the medium term, the markets look strong," added Banwait.

GEMALTO SLUMPS

French mining group Eramet (LSE: 0MGV.L - news) jumped 9.3 percent after better-than-expected results.

Among shares losing ground, Gemalto (Other OTC: GTOFF - news) , which makes smart chips for mobile phones, bank cards and biometric passports, dropped 6.8 percent after it said it would investigate a report that U.S. and British spies had hacked its systems to steal its encryption keys.

French food company Danone (LSE: 0KFX.L - news) dipped after it made a cautious 2015 sales and profit growth forecast, while Telecom Italia shares fell after the company said it would propose paying dividends only to certain shareholders and unveiled more spending plans.

However, half way into the earnings season, results have been strong in Europe. Fifty-three percent of companies' results have beaten profit forecasts, according to Thomson Reuters I/B/E/S. Fourth-quarter earnings are expected to grow 19.5 percent, which would be the best quarter in 3-1/2 years.

The rally in European stocks this year has also pushed valuation ratios to levels not seen in nearly 11 years. The broad STOXX 600 index is trading at 15.6 times earnings expected in the next 12 months, its highest price-to-earnings (P/E) ratio since mid-2004.

The FTSEurofirst 300 has risen 11 percent so far this year, outpacing a 1.9 percent gain in Wall Street's S&P 500, and helped by the European Central Bank's plans to buy government bonds to boost the economy.

"The market continues its slow progression upward and there aren't any signals of weakness at this point. Every small pull-back is a buying opportunity," said Jean-Louis Cussac, head of Perceval Finance.

Europe bourses in 2015: http://link.reuters.com/pap87v

Asset performance in 2015: http://link.reuters.com/gap87v

Today's European research round-up (Editing by Alison Williams and Susan Fenton)