By Brian Gorman

LONDON, Sept 3 (Reuters) - European shares edged higher inearly trade on Friday after gains in the United States and Japanbut with traders cautious ahead of a key U.S. labour marketreport.

At 0827 GMT, the FTSEurofirst 300 index of top Europeanshares was up 0.3 percent at 1,057.78 points, on course for arise of more than 3 percent this week.

Data due at 1230 GMT was expected to show U.S. non-farmpayrolls falling for a third straight month in August, hit bythe fading boost from census hiring, the reluctance by companiesto hire staff and the continued layoffs at cash-strapped stateand local governments.

"People are watching the growth in (U.S.) private-sectoremployment, which is likely to be too low to be good enough forthe economy," said Bernard McAlinden, investment strategist atNCB Stockbrokers in Dublin.

"The market is going up on relatively unconvincing economicdata. It just needs to know there won't be a double dip. There'sno competition from interest rates and bond yields." Energy companies were higher after crude prices closedabove $75 in New York on Thursday, boosted by an oil platformfire in the Gulf of Mexico and Hurricane Earl's possible impacton East Coast refineries.

Total, Royal Dutch Shell and Statoil rose between 0.7 and 1percent. BP was up 0.3 percent. It said the cost of dealing with itsoil spill in the Gulf of Mexico had risen to $8 billion and thatit was a fortnight away from sealing the well for good.

In a broad market rise, the heavyweight banking sector wasamong the gainers. Barclays, Credit Agricole and Credit Suisse rose between 0.6 and 0.9 percent. Across Europe, Britain's FTSE 100, Germany's DAX andFrance's CAC40 were all up 0.3 percent.

ROCHE RISES

Swiss drugmaker Roche Holding AG rose 1.2 percent aftersaying it will cut costs to cope with recent setbacks on keydrugs and rising pressures on prices from healthcare reforms.

UBS cut its year-end target for the pan-European index to1,150 points from 1,250, the broker said in a note, though thenew forecast is still a 9 percent upside from Thursday's closinglevel.

"If it becomes clear that a double-dip will be avoided (ourcentral scenario), then the potential upside is significantlyhigher," UBS strategists said.

The European benchmark soared 62 percent between hitting alifetime low in March 2009, and the end of the year. But it isup barely 1 percent in 2010 as investors worry about Europeandebt levels and the strength of the economic recovery.

The Euro STOXX 50 rose 0.3 percent to 2,723.29 points,through a key resistance level of 2718, the 50 percent Fibonacciretracement from the July 20 to Aug. 5 rally.

The index's next resistance level is 2,737, the 50 percentretracement of a fall from an April high to a May low.

Data on Friday provide a reminder of some of the problemsfaced by the euro zone peripheral countries. Activity in Spain'sdominant service sector unexpectedly fell in August after fivemonths of positive momentum, hit by a hike in value-added taxfrom July, a key survey showed. (Additional reporting by Dominic Lau; Editing by MichaelShields)