Europe shares end sharply up on earnings, data

                                
 * FTSEurofirst 300 rises 2.1 pct; hits 1-week closing high
                                
 * Mining, financial stocks feature among top gainers
                                
 * Medium-term outlook bearish; market may face sell-off
                                
 * For up-to-the-minute market news, click on [STXNEWS/EU]
                                
 By Atul Prakash
                                
 LONDON, July 22 (Reuters) - European shares surged to a
one-week closing high on Thursday on strong earnings results and
soothing macroeconomic numbers, although their medium-term
outlook appeared bearish, analysts said.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
finished 2.1 percent firmer at 1,039.35 points, the highest
close since July 14, after rising to a high of 1,040.72 earlier
in the day. It closed higher for a third straight session.
                                
 Technical charts showed the market faced tough resistance on
the upside and its short- to medium-term outlook did not look
good. Equities might face renewed selling pressure after the 
earnings season and summer holidays, the analysts said.
                                
 Miners featured among the top gainers on Thursday, supported
by strong metals prices on the back of a weaker dollar. BHP
Billiton <BLT.L>, Anglo American <AAL.L>, Antofagasta <ANTO.L>,
Rio Tinto <RIO.L> and ENRC <ENRC.L> rose 2.1 to 3.5 percent.
                                
 "We have got some positive earnings results in the U.S. and
the PMI numbers came in significantly above the consensus. For
today, that alleviates growth concerns," said Tammo Greetfeld,
equity strategist at UniCredit.
                                
 "But it's not the beginning of a new trend to the positive.
It's just a positive day in a broad sideways movement/correction
phase. We are convinced that in the course of the earnings
season, deteriorating macroeconomic data will gain an upper hand
and the equity markets will be dragged down."
                                
 Sentiment was boosted after several U.S. companies posted
impressive results. Caterpillar <CAT.N>, the world's largest
maker of construction and mining equipment, reported a
stronger-than-expected profit and raised its full-year outlook.
[ID:nN22131006]
                                
 Profit jumped 43 percent at diversified manufacturer 3M Co
<MMM.N> on strong demand in emerging markets, while package
deliverer United Parcel Service <UPS.N>, considered an economic
bellwether, said its profit rose sharply. [ID:nN21172096] 
                                
 The market witnessed a strong session on Thursday as figures
showed the euro zone's private sector surged ahead this month,
confounding expectations for a slowdown in growth and further
quelling concerns about a double-dip recession. U.S. existing
home sales also fell less sharply than expected in June.
                                
 "Just when the macro picture was looking desperately gloomy,
today's numbers have given investors a ray of hope," said Angus
Campbell, head of sales at Capital Spreads.
                                
 
                                
 MEDIUM-TERM OUTLOOK
                                
 However, analysts remained sceptical about the market's
ability to climb higher in the medium term.
                                
 "Once the earnings season is over and traders are back to
their desks in September, investors are going to take a more
sanguine view of the prospects for the markets, given the fact
that governments and households are still in the midst of a
massive de-leveraging process, which is by no means complete,"
said Bill McNamara, an analyst at Charles Stanley.
                                
 "The medium term outlook for most of the equity indices is
not great. However, it could rally some more in the summer
because you get strange movements on thin volumes."
                                
 The volume on the FTSEurofirst 300 was 84 percent of its
90-day daily average.
                                
 McNamara said the Euro STOXX 50 <.STOXX50E>, the euro zone's
blue-chip index, faced resistance at 2,768, which is a 62.8
percent Fibonacci retracement of the index's major fall from
April 27 to May 7. The index rose 2.8 percent to 2,714.21
points.
                                
 "That's going to be a significant resistance area for this
index in the medium term," he added.
                                
 Financials raced higher, with the STOXX Europe 600 banking
index <.SX7P> rising 3.2 percent ahead of the results of stress
tests for 91 European banks. Standard Chartered <STAN.L>,
Barclays <BARC.L>, Societe Generale <SOGN.PA> and Credit
Agricole <CAGR.PA> jumped 4.1 to 5.6 percent.
                                
 European bank supervisors are in the final stages of an
exercise designed to convince markets that most of the
continent's banking sector can withstand another economic
downturn and losses on government debt, and that authorities can
deal with those banks that need support. [ID:nLDE66L0DJ]
                                
 Across Europe, Britain's FTSE 100 <.FTSE>, Germany's DAX
<.GDAXI> and France's CAC 40 <.FCHI> rose 1.9 to 3.1 percent.
 (Editing by Karen Foster)