* FTSEurofirst 300 index flat
* Synthes rises as traders cite takeover talk
* Banks slip on euro zone peripheral debt worries
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By Joanne Frearson
LONDON, April 15 (Reuters) - European shares were flat on Friday, after a surge in China's inflation rate to a 32-month high fuelled expectations of further monetary tightening, while weaker-than-expected Bank of America results added to investors' cautious mood.
But Goldman Sachs said the positive long-term outlook for equities was intact, saying it was maintaining its "overweight" in equities on a three-month and 12-month horizon and that Europe was the cheapest market and had the strongest expected earnings growth across all regions in 2011.
By 1137 GMT, the pan-European FTSEurofirst 300 index of top shares was flat at 1,128.79 points and is on track to end the week lower after three-weeks of gains.
The jump in China's inflation, which topped market forecasts, prompted worries that tighter monetary policy there could slow economic growth and feed through into company earnings.
Another negative was Bank of America Corp results in which the bank posted a 37.5 percent decline in first-quarter earnings, hurt by mortgage-related costs.
"The focus is on earnings ... given interest rates are expected to rise, the market is sensitive to any sort of news flow in this area," said Mike Lenhoff, chief strategist at Brewin Dolphin, which has 25 billion pounds ($40.92 billion) of assets under management.
The euro zone's periphery was in focus again after Moody's downgraded Ireland's sovereign rating and speculation grew that Athens will eventually need to restructure its debt.
"These downgrades can periodically spook the market. These countries -- Greece, Ireland and Portugal -- are in a special situation and what is key now is that they prove to the market that they have the will to consolidate successfully," said Klaus Wiener, chief economist at Generali Investments, which manages $465 billion.
Banking stocks featured among the worst performers, with Spanish banks Santander and BBVA down 1 percent and 1.8 percent respectively on worries about euro zone peripheral contagion, and BarCap analysts cited the prospect of lower loan growth.
Overall, the STOXX Europe 600 Banks index fell 0.9 percent, with traders saying Bank of America results were also not helping the sector.
Most stock markets in the peripheries fell, with Spain's IBEX 35, Portugal's PSI 20, Greece's Athens General and Italy's benchmark down 0.3 to 0.9 percent. But, Ireland's ISEQ gained 0.4 percent following recent weakness.
SYNTHES GAINS
In terms of individual stocks, Synthes rose 3.2 percent on market talk that Johnson & Johnson or Medtronic could be interested in buying the Swiss medical device maker, traders said.
Elsewhere, Man Group gained 3.4 percent after the world's biggest listed hedge fund manager was added to Bank of America Merrill Lynch 'Europe one' list of preferred stocks.
On the downside, Carrefour shares fell 1.2 percent after the world's No.2 retailer warned of challenging conditions in its largest market, France.
Across Europe, the FTSE 100 index was up 0.2 percent, Germany's DAX was 0.5 percent higher and France's CAC 40 was down 0.3 percent. (Additional reporting by Atul Prakash)