* FTSEurofirst up 0.7 pct, Euro STOXX 50 up 0.9 pct
* Equities recover after sharp fall on Thursday
* Fears over Italy, central bank help seen short-lived
* Mining stocks lead broad-based equity rally
By Sudip Kar-Gupta
LONDON, Feb 22 (Reuters) - European shares rebounded on
Friday, with traders scooping up stocks such as miners on the
back of earlier falls, on expectation that worries over Italy
and an end to central bank stimulus would be short-lived.
The pan-European FTSEurofirst 300 index rose 0.7
percent to 1,159.98 points, recovering from a 1.5 percent fall
in the previous session.
The euro zone's blue-chip Euro STOXX 50 index
also rose 0.9 percent to 2,604.12 points, having fallen 2.3
percent in the previous session to a fresh 2013 low.
All European equity sectors were in positive territory, with
the STOXX Europe 600 basic resources sector - which
comprises major mining stocks - leading the way with a 1.5
Markets had fallen earlier this week over worries that the
U.S. Federal Reserve may curb its monetary stimulus measures and
on uncertainty over the results of elections next week in Italy,
which has been hit hard by the euro zone's debt crisis.
However, Berkeley Futures associate director Richard
Griffiths said investors were still using stock market falls to
buy shares "on the dip" on expectations that any hurdles over
potential issues such as Italy would be quickly overcome.
"The markets took a heavy dive earlier this week, but
they're showing signs of a partial recovery," said Griffiths.
"The fact that traders are still buying on the dips shows
that they're hoping that the global economic recovery will
continue, although it will take time," he added.
Italy's FTSE MIB benchmark equity index also
recovered from a 3.1 percent fall on Thursday to rise 1.1
Most investors expect a centre-left government headed by
Pier Luigi Bersani and backed by current prime minister Mario
Monti to win and continue with reforms to tackle Italy's debt
However, a resurgence by former leader Silvio Berlusconi has
caused growing doubts over the outcome, and has led many
investors to avoid taking big positions on European equities
ahead of the election result early next week.
Matthias Thiel, a market strategist at M.M Warburg & Co
Thiel said failure to form a stable, reform-oriented government
in Italy would lead his firm to review its positive stance on
"Italy would be a specific example of what we mean by
political risk. If there are signs that political risk
materialises or the fundamentals get worse again, we would
reduce our position," he said.
The majority of equity strategists and investors expect any
market decline caused by worries over Italy to be relatively
short-lived and minor, and for equity markets to hold onto their
upwards trajectory going into late March and April.
The FTSEurofirst 300 index has risen more than 2 percent
since the start of 2013.
However, BTIG equity strategist Nick Xanders said markets
could remain volatile in the near-term and backed buying
volatility options, with the Euro STOXX 50 Volatility index
having hit a fresh 2013 high this week.
"Volatility is still cheap and the risks are still skewed to
the downside," he said.