European shares rise after 3-day decline; banks up

LONDON Dec 10 (Reuters) - European shares drifted higher in early trading on Thursday after losses in the previous three sessions, with investors waiting for the Bank of England's interest rate decision later in the session.

At 0807 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 0.2 percent at 996.94 points after finishing at its lowest in more than a week on Wednesday. The benchmark index is up 20 percent this year and has surged 54 percent since hitting a record low in early March.

"The market will remain volatile until the end of the year," said Luc Van Hecka, chief economist at KBC Securities.

"Most of the major long-term investors have already closed their books for the rest of the year. The market is really in the hands of traders," he said.

Banks were among the top gainers, with Standard Chartered (STAN.L), HSBC (HSBA.L), Barclays (BARC.L), Lloyds (LLOY.L), Royal Bank of Scotland (RBS.L) and BNP Paribas (BNPP.PA) gaining 0.5 to 1.5 percent.

Investors awaited the Bank of England's decision, due at 1200 GMT. The central bank is seen leaving its 200 billion pound ($326.7 billion) asset purchase programme unchanged and keeping interest rates at 0.5 percent, and most analysts reckon it will not alter policy until February.

(Reporting by Atul Prakash)