* FTSEurofirst 300 up 0.2 pct; volumes low
* Kingfisher, Next gain after results
* Traders say Portugal bailout priced-in
* For up-to-the-minute market news, click on []
By Harpreet Bhal
LONDON, March 24 (Reuters) - European shares edged higher in
early trade, lifted by gains in retailers after upbeat results
in the sector, though low volumes showed investors stayed on the
sidelines as caution over the euro zone debt crisis lingered.
By 0957 GMT, the pan-European FTSEurofirst 300 <>
index of top shares was up 0.2 percent at 1,115.06 points,
though volumes were low at just 27 percent of its 90-day
average.
Europe's biggest home improvement retailer Kingfisher
<KGF.L> and fashion firm Next <NXT.> rose 5.4 and 5.6 percent
after both companies met profit expectations and hiked their
dividends, a day after upbeat results from Spanish peer Inditex
<ITX.MC> [] []
Shares pared losses from earlier in the session as traders
said a bailout for highly indebted Portugal was largely priced
in as its prime minister resigned following parliament's
rejection of the government's austerity measures.
"This turnaround (from earlier losses) in the Portuguese
stock market shows the market had already priced in this
scenario of the prime minister's resignation and political
instability," said Juan Dieste, trader at Orey iTrade in Lisbon,
adding that low volumes exacerbated moves.
Although a bailout has been priced-in, the political
instability is likely to prevent European Union (EU) leaders
from taking tough decisions to deal with the bloc's debt
troubles at a summit which begins on Thursday. []
"If Portugal is going to require some loans from the (EU)
funding facility the risk is that, if there is some difficulty
somewhere else, the facility is going to be exhausted," said
Mike Lenhoff, chief strategist at Brewin Dolphin.
"It's a setback to the positive steps that would have been
taken to expand the lending capacity of the funding mechanism."
An EU official said member states were putting pressure on
Lisbon to request help, concerned that continued resistance
would endanger the stability of the 17-country euro zone, but
said no talks on a bailout had begun. []
Analysts at UBS said looking at Greece and Ireland as
precedents, further market pressure is likely but the crisis
also posed an opportunity for investors to buy quality stocks at
attractive valuations.
"Investors turned extremely risk averse in these two markets
(Greece and Ireland), particularly on the banks, and as such we
fear further pressure on financial stocks, and possibly
utilities," UBS analysts wrote in a note.
"Having said that, the bailout was a good opportunity for
value investors to pick up good companies at cheap valuation so
we also highlight our preferred value picks in Portugal: Brisa
<BRI.LS>, Sonae <YSO.LS> and ZON <ZON.LS>"
ATTRACTIVE VALUE
The FTSEurofirst 300 index hit a 3-1/2 month low at 1,066.62
points last week following fears of a nuclear crisis in Japan
after a massive earthquake and tsunami, however it has since
recovered to trade just 1.6 percent off a retracement to levels
hit prior to the earthquake.
Traders said investors were buying companies on attractive
valuations in Europe, following a 3.1 percent dip on the index
last week.
"Markets were extremely volatile in the last few weeks and
there are sectors such as insurers and energy that look like
good buys at the moment after taking a big hit," said Scott
Reinert, sales trader at IG Index.
The STOXX Europe 600 insurance sector <.SXIP>, which has
lost 5.1 percent so far this month, traded up 0.1 percent.
Attractive valuations in Europe also helped lift the outlook
for equities. Thomson Reuters Datastream showed the STOXX Europe
600 <> carrying a forward price-to-earnings ratio of 10.2,
below a 10-year average of 13.6.
(Additional reporting by Harro ten Wolde in Frankfurt and
Patricia Rua in Lisbon; Editing by Mike Nesbit)
