Financials get European shares off to firm start; payday for Carillion shorts

* STOXX up 0.3 pct, DAX outperforms

* Banks underpin gains, basic resources weak

* UK mid-cap Carillion (Frankfurt: 924047 - news) crashes 32 pct after profit warning

* Moeller-Maersk hits 14-month high on Goldman note

* Orkla (LSE: 0FIN.L - news) rises on Norsk Hydro (LSE: NHY.L - news) deal (ADVISORY - Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)

By Helen Reid

LONDON, July 10 (Reuters) - European stocks edged higher on Monday, with banks and utilities the strongest sectors, as mergers and acquisitions rumbled on with some broker notes also prompting individual stock moves.

The pan-European STOXX 600 was up 0.4 percent by 0720 GMT, rising in concert with euro zone stocks and blue-chips. Strong gains in banks led by Bank of Ireland (EUREX: 1269463.EX - news) boosted the benchmarks, while basic resources were weak.

Outside the main bluechips, UK midcap construction support services company Carillion grabbed traders' attention after a profit warning and CEO exit sent its shares tumbling nearly 40 percent in heavy volumes.

Carillion shares are among the most heavily shorted across the UK market with hedge funds including Marshall Wace and Naya Capital (Other OTC: CGHC - news) reporting sizeable bearish bets according to FCA disclosure data.

The worst-performing European stock was infrastructure company Balfour Beatty (Other OTC: BAFBF - news) , down 3.7 percent as traders read across from Carillion.

In broader markets, Germany's DAX rose 0.6 percent, maintaining an edge over peers after export and import figures came in stronger than expected, with a wider increase in exports adding to the trade surplus of Europe’s biggest economy.

Shipping company Moeller-Maersk jumped 3.1 percent to a 14-month high and top STOXX gainer after Goldman Sachs raised its forecast for it and peer Hapag, on an analysis of shipping rates.

The broker however estimated a recent cyber-attack could take a $150-200 million chunk out of Maersk's revenue in the third quarter, leaving its overall profit forecast for the firm unchanged at $1.5 billion.

Shares (Berlin: DI6.BE - news) in Norwegian conglomerate Orkla were among the strongest performers, up 2.4 percent after Norsk Hydro clinched a $3.2 billion deal to buy aluminum products maker Sapa by purchasing a 50 percent stake from Orkla.

The acquirer itself only rose 1 percent.

CHR Hansen gained 1.8 percent after a raise to 'buy' from Goldman Sachs (NYSE: GS-PB - news) , which said the company had strong pricing power.

The broker found input costs for European consumer staples increased 13 percent year-to-date versus 2016, suggesting 2017 would be the first year of input cost inflation since 2011, helping drive firmer pricing.

"As input costs rise, we prefer companies with pricing power (from high gross margins or concentrated market structure) and/or self-help opportunities," analysts at Goldman said.

Food and beverage companies were the best-performing sector, up 0.7 percent, with Unilever (NYSE: UL - news) leading the FTSE 100.

German utility E.ON rose 2.5 percent, leading the buoyant utilities sector after HSBC said recent weakness offered an "excellent buying opportunity", raising the stock to a 'buy' from 'reduce'.

Analysts at UBS (LSE: 0QNR.L - news) said although relative outperformance of European versus U.S. equities has slowed recently, they saw the region regaining momentum as monetary policy began to tighten.

"Europe craves higher rates and U.S. bond yields," they wrote, pointing to the region's higher weighting in materials, industrials, financials and energy, against U.S. equities' concentration in technology and consumer discretionary sectors more suited to lower rates.

(Reporting by Helen Reid, Editing by Vikram Subhedar)