Europe stocks rally after Yellen comments; FTSE hits record

* FTSEurofirst 300 ends up 0.5 pct, touches fresh 7-year

high

* FTSE 100 hits record high above 1999 peak

* Greek bank shares surge on expectation of bailout

extension

* Europe enjoys best earnings season in nearly four years

By Blaise Robinson

PARIS, Feb 24 (Reuters) - European stocks rallied on

Tuesday, with both Britain's FTSE 100 and Germany's DAX

hitting record highs, after U.S. Federal Reserve Chair

Janet Yellen said it was likely to be several months before the

Fed raises interest rates.

Greek stocks were the top gainers 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.

Shares (Frankfurt: DI6.F - news) in National Bank (NYSE: NBHC - news) of Greece, Alpha Bank (Other OTC: ALBWF - news)

, Bank of Piraeus and Eurobank

surged 16-20 percent. Despite its recent rebound, the Greek

banking sector remains below the level it traded at before last

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

The sector is still down 50 percent from February 2014,

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

18.5 billion euros ($20.9 billion), about a fifth of the value

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

bank.

The FTSEurofirst 300 index of top European shares

ended 0.5 percent higher at 1,543.29 points, a level not seen

since late 2007.

Britain's FTSE 100 ended 0.5 percent higher after

hitting a record high of 6,958.89, surpassing its previous

all-time high reached in late 1999.

In a subtle shift of emphasis that helps lay the groundwork

for the Fed's first rate hike since 2006, Yellen said its

policy-setting committee was considering interest rate hikes "on

a meeting by meeting basis". She (Munich: SOQ.MU - news) added that an increase was not

likely for at least the next couple of meetings.

"It was a reassuring message from Yellen. The Fed will take

its time before starting to raise rates, given the low

inflation. So no change before the summer," Saxo Bank trader

Pierre Martin said.

"Investors are loving it: the U.S. economy is in good shape,

very low unemployment, and rock-bottom interest rates. These are

pretty powerful catalysts for the market."

Among the top gainers on Tuesday in Europe, Dutch tech ASML

rose 3.6 percent after saying it had passed a key

performance milestone. Mining giant BHP Billiton (NYSE: BBL - news) surged

6.2 percent, driving a sector rally, after a

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

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 earnings season since mid-2011 after three

years of stagnating earnings.

European profits overall are still 30 percent below their

peak of 2008, however, while U.S. corporate profits have

rebounded to 30 percent above their 2008 peak, Thomson Reuters

Datastream data shows.

"This gap is the biggest we've ever seen by a huge margin.

Now (NYSE: DNOW - news) it's going to start closing," said Jonathan Bell, chief

investment officer at Stanhope Capital, which oversees $9

billion in assets.

"There's scope for a reasonable rebound in European

earnings, which is one of the reasons why we're 'overweight'

Europe equities."

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

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

Today's European research round-up

(Editing by Catherine Evans)