European shares rise as financial stocks gain ground

(ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets for site in development. See the bottom of the report for more details) Adds details, updates prices)

* FTSEurofirst 300 rebounds from Monday's losses

* KBC and ING lifted by Goldman Sachs (NYSE: GS-PB - news) upgrade

* French group SEB (LSE: 0MGS.L - news) rises after WMF (LSE: 0DCQ.L - news) acquisition

* Concerns remain over possible future U.S (Other OTC: UBGXF - news) rate hikes

By Sudip Kar-Gupta

LONDON, May 24 (Reuters) - European shares rose on Tuesday, recovering from losses at the start of trading as firmer financial stocks lifted the region's equity markets.

The pan-European FTSEurofirst 300 and STOXX 600 indexes were both up around 1 percent by 1024 GMT, rebounding from losses of a similar scale incurred on Monday.

The STOXX Europe 600 Banks Index outperformed with a 1.4 percent rise. KBC and ING both climbed after Goldman Sachs upgraded them both to "buy" from "neutral".

Italian bank UniCredit (EUREX: DE000A163206.EX - news) also rose 2 percent ahead of a board meeting expected to formally approve the search for a new chief executive.

Shares (Berlin: DI6.BE - news) in French household equipment manufacturer SEB surged 11.5 percent as investors welcomed SEB's move to buy WMF, a German maker of coffee machines and silverware, from KKR in a 1.6 billion-euro deal.

Swiss drugmaker Galenica (LSE: 0QKM.L - news) fell more than 6 percent, making it the biggest loser on the FTSEurofirst 300, as investors were disappointed by its decision to postpone a break up of the group.

Some traders remained sceptical about the market rebound, with concerns about the possibility of a U.S. interest rate increase in coming weeks having weighed on world stock markets over the last month.

In spite of Tuesday's move higher, the FTSEurofirst remains down by around 4 percent over the last month.

"This is a bear market rally," said Andreas Clenow, chief investment officer of ACIES Asset Management in Zurich, pointing to headwinds from future U.S. rate rises and slow global economic growth.

Clenow said he retained a short position on European equities, namely betting on future declines on that market.

Hantec Markets' analyst Richard Perry also expected stock markets to stay choppy before Britain's June 23 vote on membership of the European Union, and until investors got more clarity on the timing of any future U.S rate rises.

"I expect us to be in a sideways trend over the coming month, although the longer-term trend is still a downwards one," said Perry.

Today's European research round-up

ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

If you have any thoughts, suggestions or feedback on this, please email mike.dolan@thomsonreuters.com.

Mike Dolan, Markets Editor EMEA.

(Additional reporting by Danilo Masoni in Milan; Editing by Keith Weir)