* FTSEurofirst 300 rises 0.3 percent
* Miners respite on China data, Alcoa results
* Staffers fall as CS highlights PMI worries
* Diageo dips after recent run raise valuation concern
By David Brett
LONDON, April 9 (Reuters) - European shares held onto gains
around midday on Tuesday as miners rose on higher metals prices
after Chinese data strengthened demand prospects and after Alcoa
kicked off the U.S. earnings season with a profit rise.
By 1114 GMT, the FTSEurofirst 300 was up 2.14
points, or 0.18 percent, at 1,166.93.
The index has found support around its 38.2 percent
retracement level of 1,154, which it struck after three days of
declines last week on the back of rising euro zone debt tensions
and weak U.S. jobs data.
Miners, which have lagged wider gains in Europe by
around 18 percent in 2013, rose 2.4 percent after inflation data
from leading metals consumer China fuelled expectations that its
monetary stimulus would stay in place and help support economic
That brightened the outlook for demand and brought some
relief to a sector, for which earnings estimates have been cut
by an average of 5.7 percent over the last 30 days, according to
Thomson Reuters Starmine data.
UBS said the recent weakness in the UK mining sector
presented an opportunity to buy, while Citigroup said BHP
Billiton was the best positioned large cap diversified
miner, with a high-quality asset base and low-cost production.
Miners are among the most shorted stocks in Europe at around
9 percent of the sector's stock, compared with a market average
of about 6 percent, according to data from Markit.
Miner ENRC, the third most shorted stock on the
UK's FTSE, extended a four-day rebound by 4.2 percent.
U.S. aluminium group Alcoa, viewed as a leading
indicator for the materials sector and for the U.S. earnings
season, posted better-than-expected first-quarter profit on
Its shares fell, but it helped boost sentiment toward
Europe's mining sector.
With economic data light in the coming days and growth
anaemic in Europe, the U.S. earnings season is likely to have a
bearing on sentiment as investors await evidence that earnings
growth can be strong enough to support recent price gains.
Ian Williams, equity strategist at Peel Hunt, said he was
waiting to see whether companies on both sides of the Atlantic
pull back on performance outlooks, given that recent data have
reduced prospects for economic growth.
"That could delay the upgrade cycle, leaving indexes a bit
vulnerable given how far valuations have come since last year,
from around nine times 12 months forward price-to-earnings (PE),
to 12 times," he said.
In Europe, earnings expectations have been cut by around 1
percent for the full year in the past 30 days, leaving question
marks over the sustainability of the 10 percent gains seen in
European shares since last June.
European staffing firms Randstad and Adecco
fell 2 percent and 1.9 percent, respectively.
They could fall as much as 6 percent as increasingly
challenging economic conditions in the United States and Europe
weigh on the outlook for jobs growth, according to Credit
Suisse. The Swiss bank cut earnings estimates for both companies
by 4 percent for the short term.
Among the top fallers was drinks firm Diageo, which
fell 2.6 percent.
"Diageo's valuation looks toppy. It has had a fantastic run
in recent weeks, and it looks like just profit-taking," Ronnie
Chopra, head of strategy at Tradenext, said.
Defensive stocks, which offer protection in the face of an
austere economic backdrop, have led the index higher so far this
year, and the food and beverage sector has re-rated to
around 20 times PE.
Elsewhere, Airbus parent EADS shed 3 percent to
37.55 euros after French media group Lagardere sold
most of its 7.4 percent stake in a price range of 37.35 euros to
37.45 euros a share, traders said.