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Greek shares rally on bailout extension expectations

* FTSEurofirst 300 up 0.2 pct, hits 7-year high

* Greek bank shares still below level of before Syriza

election

* Europe enjoys best earnings season in nearly 4 years

By Blaise Robinson

PARIS, Feb 24 (Reuters) - Greek shares surged on Tuesday,

outpacing modest gains in pan-European indexes after Athens

delivered a list of economic reforms to the euro zone that it

hopes will secure a four-month extension of its financial

lifeline.

Volatile Greek banking stocks were the top gainers across

Europe, with National Bank (NYSE: NBHC - news) of Greece up 13.9 percent,

Alpha Bank (Other OTC: ALBWF - news) up 13 percent, Bank of Piraeus up

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11.2 percent and Eurobank up 10.7 percent, as the

Greek market reopened after a three-day weekend.

Despite its recent rebound, the Greek banking sector index

is still below the level it traded at before last

month's election victory by the anti-austerity Syriza party,

which has reignited investors' worries about the country's debt

pile.

The sector has lost 85 percent since early 2012, reducing

the combined market value of Greece's top four banks to 17.8

billion euros ($20.1 billion), less than a fifth of the value of

Spain's Banco Santander (Amsterdam: SANT.AS - news) , the euro zone's biggest bank.

At 1145 GMT, the FTSEurofirst 300 index of top

European shares was up 0.2 percent at 1,537.76 points, a level

not hit for seven years.

The list sent to the Eurogroup late on Monday set out in

broad terms the measures Athens plans to implement by July,

offering assurances it will not deviate from fiscal targets or

roll back past reforms.

The six-page document, seen by Reuters, contained few

figures but promised to improve tax enforcement, fight

corruption and "review and control ...every area of government

spending".

Investors remained sceptical, however, unwilling to chase

European stocks higher after hefty gains made since the start of

the year. The FTSEurofirst 300 is up 12 percent in 2015.

"The situation is fairly exasperating. There is not a single

number or target in that list," said Ioan Smith, managing

director of KCG Europe.

"We've been in similar situations during the euro zone

crisis, where it seems like the can is being kicked down the

road with nothing really changing. With the day-to-day

volatility in Greek markets at the moment, people are playing

the markets daily for a fast return."

Elsewhere in Europe, shares in chip-making equipment builder

ASML rose 3.8 percent and hit a record high after the

company announced it had passed a key performance milestone.

Shares (Frankfurt: DI6.F - news) in BHP Billiton (NYSE: BBL - news) rose 4.6 percent, driving a

sector rally, after the global miner beat market forecasts by

posting a smaller-than-expected drop in half-year profit.

Half way into Europe's earnings season results have been

strong, with 57 percent of companies meeting or beating profit

forecasts. Overall, fourth-quarter earnings are expected to grow

by 19.5 percent, according to Thomson Reuters I/B/E/S, which

would be Europe's best season in 3-1/2 years.

"Economic activity is accelerating in Europe," said Mathieu

L'Hoir, strategist at AXA Investment Managers, which has 607

billion euros ($686 billion) in assets under management.

"The impact from the drop in energy costs and the lower euro

combined should translate into a boost of about 0.5 percentage

points to euro zone GDP... This will help companies restore

their profit margins, which remain at recession levels," he

said.

Europe bourses in 2015: http://link.reuters.com/pap87v

Asset performance in 2015: http://link.reuters.com/gap87v

Today's European research round-up

(additional reporting by Alistair Smout in London; editing by

John Stonestreet)