* FTSEurofirst 300 up 0.3 pct to 1,124.92 points
* Euro STOXX 50 up 0.6 pct to 2,598 points.
* BNP Paribas and Santander add most points to FTSEurofirst
* Concerns remain over U.S. "fiscal cliff"
By Sudip Kar-Gupta
LONDON, Dec 4 (Reuters) - European shares rose on Tuesday,
boosted by banking stocks but with gains capped by lingering
worries about the U.S. economy.
The pan-European FTSEurofirst 300 index was up by
0.3 percent at 1,124.92 points around midday, while the euro
zone's blue-chip Euro STOXX 50 index advanced by 0.6
percent to 2,598 points.
The STOXX 600 European banking index was the
best-performing equity sector, rising 0.9 percent, and gains in
French bank BNP Paribas and Spanish bank Santander
added the most points to the FTSEurofirst 300.
Bank stocks have benefited from a perception that the euro
zone's sovereign debt crisis has eased, following pledges from
the European Central Bank (ECB) to take fresh steps to protect
the euro currency from the region's economic problems.
The STOXX 600 European bank index has risen by 21 percent so
far this year, outperforming gains of 12 percent on the broader
FTSEurofirst 300 and Euro STOXX 50 indexes.
"Banks are sorting themselves out. If you're looking for a
speculative play, that's the place to be," said McLaren
Securities Managing Director Terry Torrison.
Deutsche Bank analysts also said in a research note there
were less signs of funding problems for major banks, adding that
its favoured picks in the sector included BNP Paribas and Credit
U.S. BUDGET WORRIES
European equity markets have been choppy during this last
month, due to worries over a lack of progress among U.S.
politicians over reaching a deal to delay growth-curbing
Yet many investors still prefer shares to bonds or cash, due
to the better yields on offer in equities with interest rates
near record lows crimping returns on sovereign bonds and cash.
The FTSEurofirst 300 was close to a year-high of 1,128.65
points reached earlier this week and had hit its highest closing
level since July 2011 on Nov. 29 when it ended at 1,121.83.
"Ultimately, people think Europe's OK and that equities is
the place to be. If you're going to put your money anywhere, it
makes sense to put in equities," said Torrison.
Others were more cautious due to worries over the U.S.
"fiscal cliff" - a combination of U.S. government spending cuts
and tax rises due to be implemented under existing law in early
2013 that may cut the federal budget deficit but also tip the
economy back into recession.
Michel Juvet, chief investment officer at Swiss bank
Bordier, said he would err on the side of caution by looking to
sell equities to cash in on gains made this year.
"I think there will be an agreement on the fiscal cliff, but
not before the year-end. I will look to cash in and protect my
performance," he said.