* FTSEurofirst 300 up 1 pct, Euro STOXX 50 up 0.8 pct
* Nokia rises 12 pct as better results trigger short squeeze
* Alstom, Sandvik, Electrolux also beat estimates
* Analysts say macro outlook counsels caution
By Francesco Canepa
LONDON, July 19 (Reuters) - European shares climbed to a four-month high on Thursday as another string of estimate-beating corporate results surprised investors who had braced for a weak show.
Shares in ailing handset maker Nokia, short interest in which had reached record highs ahead of its results, surged 12 percent to top the European leaderboard after reporting a smaller-than-expected quarterly loss.
Industrial groups Alstom and Sandvik, home appliances company Electrolux and paints maker Akzo Nobel all reported strong results sending the shares up between 3 percent and 6 percent.
They were among the top risers on the pan-European FTSEurofirst 300 index, which rose 1 percent to 1064.47 points, while the euro zone Euro STOXX 50 ended up 0.8 percent at 2,302.45 points.
The upbeat results also helped the European reporting season extend its good start, which has seen companies that have reported so far, roughly 9 percent of those due to do so, beat consensus estimates by nearly 8 percent, Thomson Reuters Starmine data showed.
Many of them, however, including Akzo Nobel and Sandvik on Thursday, warned of a tough environment ahead, especially in Europe.
"It looks like it has been a decent start but overall I suspect the season will be a miss (due to) the deterioration in the macroeconomic environment over the past two or three months," Daniel McCormack, a strategist with Macquarie, said.
"If you look at the numbers in detail it's clear there is downward momentum."
Mc Cormack highlighted the fact that the recent equity surge, helped by simultaneous monetary easing by central banks across the world, had been driven by defensive stocks - with healthcare, food & beverage and telecoms stocks as the best performers - suggesting investors remained sceptical about the global economic outlook.
He expected the rally to falter as earnings started to miss estimates, global macro data continued to disappoint and Europe's debt crisis worsened.
SPAIN DEBT, U.S. DATA
Spain's borrowing costs soared to a new euro-era high at an auction on Thursday, sparking talk the country would need external help, while U.S. jobless and factory data disappointed, renewing speculation the Federal Reserve may intervene to shore up the economy.
"Spain is the elephant in the room: I think it's going to have an official level of assistance because it can't keep funding itself at these levels," Robert Quinn, chief European equity strategist at Standard & Poor's Capital IQ.
"The market is fully kept afloat by expectations of further central bank policy intervention. You can understand why bulls are having a moment in the sun, but that bull will run into the elephant that is Spain."
Matthieu Driol, an analyst with technical firm Day-By-Day, also said the end of the rally was "close" and recommended that investors watch out for any sign that the rally is faltering to start taking profit.
The pan-European STOXX 600 pushed through a major technical resistance at 260 points on Thursday to close up 1.1 percent higher at 261.86.
"I want to turn negative on this index but I will do that only when it comes back below the 260 level," Driol said.
"It's difficult to sell now because you don't have any stop on the upside. You need a close above 260 to be sure all short sellers have been squeezed out and then have a strong reversal. Then I'll have my bearish signal."