* FTSEurofirst 300 up 0.3 pct, adds to Tuesday's small gains
* Portugal 2-year bond auction in focus
* EADS rises on outlook, new orders
* For up-to-the-minute market news, click on []
By Blaise Robinson
PARIS, March 9 (Reuters) - European stocks rose in early
trade on Wednesday, adding to the previous session's tentative
rebound as Brent crude retreated for a third day, though gains
were limited as investors braced for Portugal's bond auction.
European aerospace and defence group EADS <EAD.PA> rose 3.2
percent after it forecast higher revenue and stable core
operating profit this year while bagging a slew of Airbus orders
in the last 24 hours. []
At 0930 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.3 percent at 1,151.56 points.
The index is down about 3.5 percent since reaching a
29-month high on Feb. 18, while U.S. crude oil prices <CLc1>
have gained more than 20 percent over the same period, a rally
fuelled by unrest in Libya and fears of contagion to other
countries in the Middle East and North Africa.
Oil retreated on Wednesday as reassurances from OPEC members
of ample spare capacity helped sooth worries about production
losses from Libya. []
Energy stocks lost ground, with BP <BP.L> down 0.4 percent
and Repsol <REP.MC> down 1.2 percent.
"I don't see too much direction either way. Everyone's still
focused on what's happening in the commodity space," said a head
of institutional trading at a London-based investment bank.
Investors awaited results from Portugal's two-year bond
auction, as concerns over sovereign debt levels in the euro zone
resurface.
Portugal looked set to pay a higher premium than previously
to sell up to 1 billion euros of two-year bonds, after its
two-year yields hit their highest since May and 10-year yields
marked new euro lifetime highs on Wednesday.
"With the Portuguese bond auction today and euro zone
sovereign debt issues coming back into the forefront, the market
could be in for a turn," said Matt Brown, trader at Catalyst
Markets.
Portugal's main stock index PSI 20 <> was down 0.4
percent, while the Peripheral Eurozone Countries Index
<.TRXFLDPIPU> was down 0.3 percent.
Tech shares lost ground, with Alcatel-Lucent <ALUA.PA> down
4.3 percent, Infineon <IFXGn.DE> down 1.2 percent and
STMicroelectronics <STM.PA> down 0.8 percent after U.S. tech
bellwether Texas Instruments <TXN.N> issued a current-quarter
earnings target slightly below Wall Street estimates, citing
weaker-than-expected demand for chips. []
Around Europe, UK's FTSE 100 index <> was down 0.1
percent, Germany's DAX index <> up 0.5 percent, and
France's CAC 40 <> up 0.2 percent.
The recent pull-back has trimmed the benchmark indexes'
year-to-date gains, with the FTSE 100 now up only 1.2 percent so
far this year, the DAX up 4.2 percent and the CAC 40 up 5.8
percent.
But despite the rise in geopolitical risks, fund managers
said inflows into equities have been brisk this quarter.
"Appetite for risk has risen, which has been supporting
equities ... Overall, stocks are still relatively undervalued,"
said Francis Ailhaud, CEO of Groupama Asset management, which
has 90 billion euros in assets under management.
Europe's broad STOXX 600 index <> currently trades at
10.9 times expected earnings, below a 10-year average of 13.6,
according to Thomson Reuters Datastream data.
(Additional reporting by Joanne Frearson and Simon Jessop in
London; Editing by Will Waterman)
