* FTSEurofirst 300 up 0.2 pct, Euro STOXX 50 up 0.4 pct
* Rajoy's victory in Galicia fuels Spanish bailout hopes
* JPMorgan sees more outperformance for Europe shares
By Blaise Robinson
PARIS, Oct 22 (Reuters) - European stocks were slightly up
around midday on Monday, as renewed expectations that Spain was
moving closer to seeking a bailout eclipsed recent worries over
Euro zone banks rallied strongly, with Commerzbank
up 3.8 percent and UniCredit up 2.6 percent.
Spain Prime Minister Mariano Rajoy clinched election victory
in his home region of Galicia on Sunday in a result seen as
overcoming a hurdle on the path to a formal bailout request.
According to European officials and analysts, Rajoy had
wanted to wait until the regional elections before requesting a
bailout, which would trigger the European Central Bank's
bond-buying programme aimed at lowering the country's high
At 1127 GMT, the FTSEurofirst 300 .FTEU3 index of top
European shares was up 0.2 percent at 1,114.11 points.
The index last week surged to just a few points below a
14-month high hit in mid-September, before dropping 0.8 percent
on Friday, hurt by weak corporate earnings from U.S. bellwethers
such as General Electric.
The global conglomerate posted a weaker-than-expected
quarterly revenue and set a cautious tone for next year, warning
that it expects the tough economic environment to continue.
The euro zone's blue chip Euro STOXX 50 index
was up 0.4 percent at 2,552.91 points. The benchmark index has
surged around 20 percent since late July, outperforming U.S.
stock indexes, on expectations the ECB will start buying bonds
of debt-stricken countries to lower their borrowing costs.
"The systemic risks have abated, with the ECB becoming a
lender of last resort. Europe might still be in recession but we
know that already and it seems that the economic cycle might be
reaching a bottom right now," Barclays France director Franklin
"The talks about a potential delay on the 3 percent deficit
target for euro zone countries to 2014 or even 2015 to give
breathing space to some countries is also a positive development
that could help revive growth."
Around Europe, UK's FTSE 100 index was up 0.1
percent, Germany's DAX index down 0.1 percent, and
France's CAC 40 up 0.1 percent.
Philips Electronics featured among the top gainers,
up 4.5 percent after the firm posted forecast-beating results
and said it is on a "good trajectory" to meet its 2013 targets.
JPMorgan strategists see Europe's stock market
outperformance against the United States continuing as more
investors rebalance their portfolios in response to the region's
reduced macroeconomic risk
"We think that this rebalancing has more to go and that
European outperformance should continue," they wrote in a note.
The strategists cited a reduction in so-called 'tail risk'
after the ECB assumed the role of buyer of last resort, cheap
valuations and relative earnings momentum as all favouring
Europe over the United States.
"(The) valuation case for Europe is compelling. Euro zone
equities trade at (a) 42 percent price-to-book discount to the
U.S., and this is ex Financials," they wrote.