European shares hit two-week high, led by Standard Life

* FTSEurofirst 300 up 0.8 pct; highest since March 12

* Standard Life (LSE: SL.L - news) gains on Ignis acquisition

* Analysts see equity markets trapped in range

By Tricia Wright

LONDON, March 26 (Reuters) - European shares hit two-week highs on Wednesday, led by UK insurer Standard Life on deal news, with broad sentiment buoyed by stronger U.S. data as well as optimism over possible stimulus measures in the euro zone and China.

Standard Life rose 5.2 percent in brisk trade after it bought Ignis Asset Management for 390 million pounds - a week after the British finance minister overhauled the country's pensions and savings industry.

"The move is strategic and absolutely necessary to diversify their overall business away from their traditional pensions and life insurance area in light of the bombshell news announced from the 2014 UK budget on how pensions are handled," Jordan Hiscott, senior trader at Gekko Global Markets, said.

Hiscott's six-month target price for the company is 437 pence, its May 2013 peak and some 11 percent above Wednesday's price.

Trading volume in Standard Life was already around its 90-day daily average near midsession, against half seen on the pan-European FTSEurofirst 300.

The FTSEurofirst 300 was up 0.8 percent at 1,321.16 points by 1124 GMT, having hit its highest level since March 12, with robust U.S. consumer confidence and house price data released on Tuesday helping to fuel the advance.

The prospect of stimulus measures from the European Central Bank (ECB) came back into focus after ECB governing council member Jens Weidmann said the ECB was not ruling out buying loans and other assets from banks to support the euro zone.

Bets that China would further stimulate its economy also helped underpin market gains, although analysts noted that the country had limited scope to provide further monetary stimulus, and that going for more growth could lead to problems.

"If you're worried about your real estate sector or your banking sector, the last thing you're going to be wanting to do is lower the reserve requirements on that sector. But having said that, the market believes it," CMC Markets senior market analyst Michael Hewson said.

Nevertheless, analysts reckoned that European equity markets will remain range bound. The FTSEurofirst 300 has been trading between about 1,263 and 1,353 since the start of the year.

"That up and down pattern does seem to be the way it's going to be this year. The valuations get to the top of that channel, they run into a little bit of profit taking ... (and then) there still seems to be some buying interest," Peel Hunt equity strategist Ian Williams said.

"I think that might continue for a bit longer until the earnings support seems to get a bit more solid which of course isn't happening yet."

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 Louise Ireland (Other OTC: IRLD - news) )