* FTSEurofirst 300 up 1.2 pct, Euro STOXX 50 up 1.5 pct
* Good start to U.S. fiscal talks spurs rebound
* JPMorgan AM says buy dips, tips U.S. stocks over Europe
* Subsea 7 falls in heavy volume after gloomy outlook
* Daily charts still bearish after support breach
By Francesco Canepa
LONDON, Nov 19 (Reuters) - European stocks rose early on
Monday as a constructive start to budget talks in the United
States triggered a broad-based rebound from a 3 1/2-month low.
On Friday, leaders of the U.S. Senate and House said they
would be flexible in efforts to settle policy differences to
avert a $600 billion 'fiscal cliff' of tax hikes and spending
cuts, which could send the world's largest economy into
recession if no agreement is reached.
"Both sides are saying the right thing: that they are open
to compromise," Dan Morris, a global strategist at JPMorgan
Asset Management, said.
"We had a selloff and that was the opportunity for some
people to get back in at a better price and if we get some more
(selling) I think one should do the same."
The pan-European FTSEurofirst 300 index, which had
fallen 2.7 percent in the previous week on concerns about the
fiscal cliff, was up 1.2 percent at 1,080.45 points at 1137 GMT.
All sector indices on the pan-European STOXX 600
index were in positive territory, led by shares that depend on
economic growth, such as auto stocks and banks.
Curbing gains on the index was Norwegian offshore oil
engineering group Subsea 7, which warned sales next
year could be hit by bottlenecks and delays on projects,
temporarily sending its shares to a three-month low in volume
120 percent the full-day average.
JPMorgan's Morris expected high single-digit returns for
global equities next year and preferred U.S. equities to their
European counterparts thanks to their superior earnings
prospects and expectations the former would benefit more from a
low bond yield environment in the United States as a result of
the U.S. Federal Reserve's asset purchase programme.
Companies in the STOXX 600 index were expected to report a
9.4 percent increase in earnings next year, compared to 10.5
percent growth for stocks in the U.S. Standard & Poor's 500
index, according to Thomson Reuters Starmine estimates.
As a further reason keeping buyers away from Europe, Morris
flagged concerns about struggling Greece, which has yet to
secure the second tranche of its bailout package.
A meeting of euro zone finance ministers was set to discuss
aid to Greece on Tuesday and traders said any sign of
disagreement at that meeting could send European markets into
"Current optimism could not only be short-lived but
attention could swiftly shift from the U.S. to Greece," a
London-based trader said.
Charts on the euro zone Euro STOXX 50 index, up
1.5 percent to 2,462 points, pointed to a still-negative outlook
to the end of the year after the index broke below its October
11 and November 9 bottoms last week, showing the selling
pressure was piling up.
"I think the market is going to consolidate the up move
between June and September," Ouri Mimran, a technical strategist
at Natixis in Paris, said.
Mimran said the Euro STOXX 50 could fall back to 2,394
points and 2,263 points by the end of the year, corresponding to
the 38.2 percent and 61.8 percent retracements of the
June-September 27 percent rally.