European shares rise on German sentiment boost, stimulus bets

* FTSEurofirst 300 up 0.5 pct, Euro STOXX 50 up 0.8 pct

* ZEW beats expectations, boosts improvement hopes

* Indexes underpinned by ECB stimulus speculation

By Francesco Canepa

LONDON, Nov 18 (Reuters) - European stocks rose for a second straight day on Tuesday, helped by an improvement in German economic sentiment and speculation about fresh monetary stimulus in the euro zone.

Frankfurt's DAX index rose 1.1 percent after the ZEW survey showed German analyst and investor sentiment rose in November for the first time in almost a year, beating expectations and raising hopes of an improvement in Europe's biggest economy.

"We do think that the German economy is going to hold its growth momentum of this year into the next - so no major improvement but no disappointment," Matthias Thiel, a strategist at M.M. Warburg & CO in Hamburg, said.

The FTSEurofirst 300 index of top European shares was up 0.5 percent at 1,359.08 points, with the euro zone-only Euro STOXX 50 up 0.8 percent at 3,111.15 points.

The indexes were extending gains from the previous session, when the European Central Bank President Mario Draghi said the bank's stimulus is gaining traction but repeated the central bank's readiness to do more if necessary.

"The European market is clearly driven by the ECB, and the fact that Draghi reaffirms the bank's determination to support the economy is positive," said Alexandre Baradez, chief market analyst at IG France.

Among single stocks, British infrastructure group Balfour Beatty rose 5.6 percent after reaffirming its profit outlook for the full year, and saying it had made progress towards addressing the management issues around its UK construction business.

Auto stocks also gained as data showed European new car sales rose 6.2 percent in October from year-ago levels as premium leaders including Volkswagen (Other OTC: VLKAF - news) recorded stronger demand in key markets. VW's shares rose 1.4 percent.

Shares (Frankfurt: DI6.F - news) in European cable and telecoms company Altice bucked the trend, falling 4 percent after private equity firms Carlyle and Cinven sold 7.5 million shares.

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 Blaise Robinson in Paris Editing by Jeremy Gaunt)