Banks lead European stocks higher; oils weigh

* FTSEurofirst 300 index closes up 0.2 pct

* Banks rise; TeliaSonera up

* Energy stocks fall as crude drops

By Joanne Frearson

LONDON, Sept 23 (Reuters) - European shares closed higher on Wednesday as investors awaited the U.S. Federal Reserve's rate decision, with gains in banks outpacing falls in energy stocks.

The pan-European FTSEurofirst 300 <.FTEU3> index of top shares closed up 0.2 percent at 1,006.09 points, having earlier fallen to a low of 1,003.05.

The index has soared 56 percent since reaching a floor in March, and is up 21 percent in 2009, on track to record its best quarterly performance in nearly a decade.

"Everyone is waiting for the Federal Reserve and the comments that are going to be made," said Philippe Gijsels, senior equity strategist at Fortis Bank.

Banks were the major gainers. Banco Santander , Standard Chartered , Credit Suisse and BNP Paribas advanced 1.2 to 4.3 percent.

Telecommunication stocks were in demand. TeliaSonera gained 2.6 percent on renewed market talk of interest by France Telecom , traders said. [ID:nLN481941]

A spokesman at the Nordic region's biggest telecom operator declined to comment, while France Telecom denied the rumour. France Telecom shares were down 1.4 percent.

Across Europe, the FTSE 100 <.FTSE> index was down 0.1 percent, Germany's DAX <.GDAXI> was 0.1 percent lower and France's CAC 40 <.FCHI> was down 0.1 percent.

ENERGY STOCKS FALL AS CRUDE DROPS

Energy stocks took the most points off the index. Crude dropped 3.5 percent after U.S. oil inventory data showed a surprise and large rise in crude oil stocks and that refined products supplies rising more than expected. [ID:nN23395452]

BP , Royal Dutch Shell and Total were down 0.9 to 1.4 percent.

Liberty International shed 10.1 percent after the real estate investment trust launched a placing of 56.1 million new shares. British peers British Land , Hammerson and Land Securities fell 1.4-4.5 percent.

The Fed's policy decision was expected at around 1815 GMT.

Economists forecast the policy-setting Federal Open Market Committee would hold its target range for overnight interest rates steady at zero to 0.25 percent until at least 2010.

The Fed was also expected to keep its financial support for the economy in place but may offer a suggestion of how it plans to withdraw that underpinning.

Analysts said the market was directionless.

"There is no clear trend at the moment, no big buy or sell signals," said Jacques Henry, analyst at Louis Capital Markets, in Paris.

"Last year's slump was excessive, but this has now been fully corrected, and at this point, it's hard to see a catalyst that could keep the rally going," he said.

Stocks in the FTSEurofirst 300 index currently trade at 13.75 times expected earnings, the index's highest price-earnings ratio since May 2006, according to Thomson Reuters data.

(additional reporting by Christoph Steitz; Blaise Robinson)