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* FTSEurofirst 300 index rises 0.6 percent
* Nervous trading ahead of U.S. election
* Hannover Re advances on bright outlook
By Atul Prakash
LONDON, Nov 6 (Reuters) - European shares bounced back on Tuesday, led by insurers after Hannover Re gave a bullish picture on its profits, although the U.S. election kept the market cautious.
Hannover Re, the world's third-biggest reinsurer, rose 5.6 percent after beating forecasts with a net profit rise of 63 percent in the third quarter. It lifted its expectations for this year and the next following the results.
The company helped European insurers to rise 1.1 percent and top the gainers' list. European technology shares , up 0.8 percent, followed, helped by a 2.9 percent gain in ARM Holdings, which rose on technical buying and on a report that Apple may use ARM chips in its products.
At 1216 GMT, the FTSEurofirst 300 index of top European shares was up 0.6 percent at 1,115.30 points after falling 0.6 percent in the previous session. Volumes by midday were 30 percent of its 90-day daily average.
"Some corporate highlights are helping to enliven what is fundamentally a quiet market ahead of the U.S. election," Chris Beauchamp, equity analyst at IG Index said.
Polls show that U.S. President Barack Obama and Republican challenger Mitt Romney will have a close fight in Tuesday's election. Whoever wins must try to resolve "fiscal cliff" negotiations on spending cuts and tax increases.
"The market is up on hopes that there could be a decisive outcome of the U.S. presidential election. There is not a lot of volume going through as people are just positioning themselves to see what happens," David Scott, senior stock broker at Redmayne-Bentley, said.
"Whoever wins has got a massive task to sort the American economy out. I would recommend holding cash and waiting for some buying opportunities in the near term."
The scheduled U.S. austerity move of up to $600 billion, which will come into force next year unless a deal is reached, has the potential to drag the economy back into recession.
"It all feels a little half-hearted at the moment ... trade is extremely light ahead of the election," Paul Kavanagh, market strategist at Killik & Co said.
"Near term, the market will be focusing on the Greek situation and for further comments from (Spanish Prime Minister Mariano) Rajoy on whether he will kick start the OMT (the ECB's bond-buying) programme. These two uncertainties will continue to weigh on sentiment in the near term."
The parliament in Athens votes on Wednesday on measures including cost cuts and tax hikes amounting to 13.5 billion euros ($17 billion) by 2016. Approval of the reforms and the passage of the 2013 budget are crucial to unlocking 31.5 billion euros in aid.
A report in El Pais said the European Commission has made grim economic forecasts for Spain until 2014, shooting down the targets set out by Madrid and potentially pushing it closer to seeking euro zone aid.
The euro zone's blue chip Euro STOXX 50 index was up 0.7 percent at 2,534.14 points. The index hovered above its 50-day moving average of 2,512 and had a crucial support at around 2,465, representing a trendline on charts that has been in place since August.
"As long as prices are staying above the 50-day moving average line, the short-term upward bias remains intact. I am still looking for a break above the longer-term trendline on a weekly chart at 2,560 and a strong horizontal resistance at 2,610," Roelof-Jan van den Akker, senior technical analyst at ING Commercial Banking, said.
He said a breach of those levels would enable a further rally in the longer term towards 3,000.
Defensive shares broadly underperformed the wider market, with the healthcare sector up 0.1 percent and utilities shares staying flat. E.ON, Germany's largest utility, fell 1.3 percent after traders said Morgan Stanley had cut the group to "underweight" from "equal-weight".
Air France-KLM rose 6 percent after better-than-expected results and a recent drop in oil prices to near four-month lows prompted short sellers to cover their positions by buying back the shares.