* FTSEurofirst up 0.6 pct, Euro STOXX 50 rises 0.7 pct
* German ZEW boosts investor sentiment
* Danone surges after sales growth beats forecasts
* Italian elections still weighing on some investors
By Sudip Kar-Gupta
LONDON, Feb 19 (Reuters) - European shares rose on Tuesday,
lifted by gains at food group Danone and fresh signs
of a German economic recovery, although broader market sentiment
remained cautious ahead of Italian elections this weekend.
The pan-European FTSEurofirst 300 index ended a
three-day losing streak to advance 0.6 percent to 1,166.62
points by around midday, while the euro zone's blue-chip Euro
STOXX 50 index rose 0.7 percent to 2,635.07 points.
Some traders and strategists have expected European equity
markets to edge lower this month, partly on expectations that
uncertainty over Italian elections this weekend might cause a
pull-back on stock markets after they rallied in January.
However, Royal London Asset Management European equities
fund manager Andrea Williams felt the Italian elections would
result in a government likely to continue reforms to tackle
Italy's debt problems, which would reassure investors.
Williams added that encouraging corporate results from
Europe's top companies pointed to further gains for European
equities this year.
According to Thomson Reuters Starmine data, 60 percent of
the companies on the European STOXX 600 index to have
reported fourth-quarter results have beaten or met market
forecasts for those earnings figures.
"Italy is one more hurdle to overcome, but generally the
corporate numbers that have been coming through have been quite
good," said Williams.
Germany's DAX equity index rose 0.8 percent to
7,688.72 points, helped by the country's ZEW economic survey
which showed that German investor sentiment had risen to its
highest level in nearly three years in February.
A 2.7 percent rise in German chemical stock Bayer
added the most points to the FTSEurofirst 300 index, which
traders attributed to a price target upgrade on Bayer by UBS.
French group Danone topped the FTSEurofirst 300's
leaderboard, rising 4.4 percent after its sales growth beat
However, Danone added it would cut around 900 jobs in Europe
to cope with a downturn in southern Europe, where countries such
as Spain, Italy and Greece have been hit hardest by the euro
zone's sovereign debt crisis and economic slump.
The FTSEurofirst has edged back around 1 percent from a 2013
high of 1,178.55 points since the start of February, as some
investors use those lingering worries over the likes of Spain
and Italy to sell shares and book a profit on January's gains.
Societe Generale strategist Arthur Van Slooten said this
recent pullback could provide a buying opportunity in euro zone
bank stocks and southern European shares, if the Italian
election results in a government set to continue with reforms to
fix Italy's debt burdens, as many expect.
Rob Jones, co-head of pan-European equities at Union
Bancaire Privee (UBP), also said the longer-term outlook for
European equities remained positive, although there may be some
bumps along the road.
"We would expect European equity markets to make further
progress in 2013 but we doubt that the trajectory will be in a
straight line," he said.