European shares up on encouraging U.S. company results

* FTSEurofirst 300 gains 0.4 percent after falling earlier

* Sentiment improves after results from major U.S. firms

* Cyclical shares lead the bounce, autos gain the most

By Atul Prakash

LONDON, April 17 (Reuters) - European equities rose in late trading on Thursday after losing ground earlier in the session, with upbeat results from major U.S. companies like Morgan Stanley (Shenzhen: 002588.SZ - news) , Goldman Sachs (NYSE: GS-PB - news) and General Electric (Swiss: GE.SW - news) improving sentiment.

Morgan Stanley (Berlin: DWD.BE - news) reported a 55 percent jump in first-quarter earnings, General Electric posted a 12 percent rise in overall industrial profits and both earnings and revenue of Goldman Sachs beat market estimates.

"When we look at the U.S. results coming out today, there was a predominantly positive beat overall," Gerhard Schwarz, head of equity strategy at Baader Bank (Xetra: BWB.DE - news) , said.

"The results certainly may come in quite well over the next couple of weeks because companies have done a lot guiding lower over the last weeks and this is probably a good basis for positive surprises."

Encouraging U.S. results helped cyclical sectors to gather pace, with the STOXX Europe Automobile and Auto Parts index rising 1.7 percent to become the top performing sector. The travel and leisure index rose 1.5 percent, while insurers were up 1.1 percent.

The market was also supported by data showing a less-than-expected rise in U.S. unemployment benefits. New applications for unemployment benefits held near their pre-recession levels last week, offering further evidence of the economy's underlying strength.

A rally in cylical stocks following soothing U.S. company results helped the FTSEurofirst 300 of top European shares to gain 0.4 percent to 1,327.35 points by 1446 GMT.

"We forecast that over half of the U.S. companies that are reporting over the current results period will beat analysts' estimates and that looks like it is happening, as this week's results show," said Lorne Baring, managing director of B Capital Wealth Management in Geneva.

"We are advising investors to hold the line and stay invested in equities as there's upside on both sides of the Atlantic (Frankfurt: 98S.F - news) from current levels."

However, investors remained wary of placing strong bets before a four-day Easter weekend in Europe and as some European companies reported earnings that were knocked by currency effects. The FTSEurofirst 300 index fell to a low of 1,317.62 earlier in the session before recovering.

Dutch firm AkzoNobel fell 6.1 percent after lower-than-expected earnings, which it blamed on adverse currency movements, while Germany's SAP (NYSE: SAP - news) was down 1.6 percent after warning the damage from volatile exchange rates could worsen in the second quarter.

Gains in the broader market were capped by a decline in food and beverages stocks. The sector index dropped 0.7 percent, led lower by a 3.8 percent fall reported by Diageo (Berlin: GUI.BE - news) after reporting a decline in third-quarter organic net sales.

The sector index also came under pressure from a 3.2 percent fall in Remy Cointreau (Frankfurt: RMC.F - news) after warning its full-year operating profit would plunge as much as 40 percent.

"Remy and Diageo (LSE: DGE.L - news) have been hit by their performance especially in China, and that's having a knock-on effect onto other companies that have also in the past posted weak emerging market figures, such as Unilever (NYSE: UL - news) ," said Manoj Ladwa, head of trading at TJM Partners.

Europe bourses in 2014: http://link.reuters.com/pap87v

Asset performance in 2014: http://link.reuters.com/gap87v

Today's European research round-up (Additional reporting by Alistair Smout; editing by Andrew Roche)