* FTSEurofirst 300 up 0.5 pct; hits three-month high
* Stock valuation at highest since mid-May
* ECB, BoE keep rates on hold; ECB comments awaited
* For up-to-the-minute market news, click on []
By Blaise Robinson
PARIS, Aug 5 (Reuters) - European stocks hit a three-month
high on Thursday in a broad rally ahead of the European Central
Bank's comments on the economy, but the gains were limited by a
bit of disappointment on the earnings front.
Unilever <ULVR.L> tumbled 4.9 percent after its results
missed forecasts and the food major warned of rising pressures
from rivals and higher commodity costs.
And British bank Barclays <BARC.L> sank 3.5 percent --
shedding some of the gains made in the recent weeks -- after
posting results that failed to impress investors.
At 1151 GMT the FTSEurofirst 300 <> index of top
European shares was up 0.5 percent at 1,075.97 points, while the
Euro STOXX 50 <>, the euro zone's blue chip index, was
up 0.6 percent at 2,842.26 points.
The two benchmark indexes have gained about 12 percent and
14 percent respectively since hitting a low in early July.
Investors' appetite for risky assets such as stocks has
improved in the wake of reassuring stress tests on the banking
sector, news that a planned reform of the sector would be scaled
down, and solid corporate results across the board.
"Stocks have been range-bound but now we're flirting with
the upper end of the range thanks to the strong earnings over
the past weeks," said David Thebault, head of quantitative sales
trading, at Global Equities in Paris.
"What we need now to really break out of the range is a
little help from the macro data. Tomorrow's (U.S.) payrolls and
unemployment rate will be particularly watched."
As expected, both the Bank of England and the ECB kept
interest rates unchanged on Thursday, while investors awaited
the ECB's comments from President Jean-CLaude Trichet.
Trichet is expected to reaffirm that key ECB policy rates
remain "appropriate", cementing economists' view that the bank
will keep rates on hold well into next year.
But the main focus for investors is expected to be on
Trichet's comments on the economy, to see whether the ECB sees
the euro zone recovery maintaining its recent strong pace.
The market also keenly awaited Friday's U.S. non-farm
payrolls figures, coming in the wake of a batch of weak U.S.
data that rekindled fears of a double-dip recession and weighed
on the dollar.
Around Europe, UK's FTSE 100 index <> was up 0.3
percent, Germany's DAX index <> up 0.6 percent, and
France's CAC 40 <> up 0.8 percent.
The recent strong rally has lifted European stock valuations
to levels not seen in nearly three months. Shares in the
FTSEurofirst 300 trade at an average 13.4 times reported
earnings, a level not seen since mid-May.
"Stocks in defensive sectors such as utilities, telecoms and
pharma are still excessively undervalued," said Jacques Burlot,
fund manager at Tocqueville Finance in Paris.
"It's not normal that these relatively safe sectors trade at
half the price-to-earnings ratio of industrial stocks that are
very cyclical."
(Additional reporting by Florent Le Quintrec; Editing by Greg
Mahlich)
