Telefonica leads European shares higher

                                
 * FTSEurofirst 300 rises 0.8 percent
                                
 * Telefonica up after results
                                
 * Bayer drops on downbeat outlook for 2010
                                
 
                                
 By Brian Gorman
                                
 LONDON, Feb 26 (Reuters) - European shares were higher in
early trade on Friday, after U.S. markets staged a late recovery
in the previous session and with Spanish group Telefonica
<TEF.MC> higher after full-year results.
                                
 At 0918 GMT, the FTSEurofirst 300 <.FTEU3> index of top
European shares was up 0.8 percent at 1,004.29 points. The index
fell 1.7 percent on Thursday on worries about Greece's debt and
weak U.S. economic data.
                                
 The European benchmark is up 55 percent from its lifetime
low last March but down 6.5 percent from a 15-month set last
month. 
                                
 Telecoms group Telefonica rose 1.2 percent after posting
2009 earnings which met forecasts, and setting modest growth
targets for 2010. [ID:nLDE61P08B]
                                
 Miners rose after the copper and other metal prices reversed
some of Thursday's losses. Anglo American <AAL.L>, BHP Billiton
<BLT.L>, Lonmin <LMI.L> Eurasian Natural Resources <ENRC.L>,
Vedanta <VED.L> and Rio Tinto <RIO.L> gained 1.5-2.5 percent.
                                
 Oil companies to rise included BP <BP.L>, up 1.1 percent, as
oil prices <CLc1> stabilised around $78.
                                
 U.S. stocks recovered most of their losses but still ended
lower on Thursday after weak employment and durable goods data
added to worries about the strength of the economic recovery.
                                
 Japan's Nikkei average <.N225> edged up with stronger than
expected domestic output helping counter weak U.S. data.
                                
 "The main thing driving the market higher was Asian data
overnight," said Bernard McAlinden, investment strategist at NCB
Stockbrokers, in Dublin.
                                
 "Markets are probably going to have trouble making new highs
now, with worries about policy. The worry is that the economy
will double dip, though we've got confirmation all round that
interest rates will stay low."
                                
 Across Europe, Britain's FTSE 100 <.FTSE>, France's CAC 40
<.FCHI> and Germany's DAX <.GDAXI> were up 0.8-0.9 percent.
                                
 
                                
 BAYER FALLS
                                
 Among other major companies reporting, Germany's largest
drugmaker, Bayer <BAYGn.DE>, fell 3 percent after forecasting
2010 core profit slightly below expectations as higher feedstock
costs hold back recovery at its plastics division.
[ID:nLDE61P0AM]
                                
 Lloyds Banking Group <LLOY.L> fell 1.4 percent after posting
a 6.3 billion pound ($9.7 billion) loss for 2009 when the
part-nationalised British bank lost 24 billion pounds on loans
that soured, mostly from old HBOS assets. [ID:nLDE61O2G9]
                                
 However, the banking sector was generally higher. 
                                
 Heavyweight HSBC <HSBA.L>, which reports on Monday, was up
1.7 percent. Banco Santander <SAN.MC>, Barclays <BARC.L> and
UniCredit <CRDI.MI> rose 1.7-1.8 percent.
                                
 Austria's Erste Group Bank <ERST.VI> fell 1.9 percent after
saying it expects bad debt charges in eastern Europe to remain
"elevated" this year after higher risk provisions pushed
fourth-quarter earnings below estimates.
                                
 U.S. economic data due later includes sales of existing
homes, and a revision of fourth-quarter GDP.
 (Editing by Dan Lalor)
 ($1 = 0.6521 pound)