Firmer pharmaceutical stocks nudge European shares higher

* FTSEurofirst 300 ends up 0.2 pct at 1,326.37 points

* ESTOXX 50 closes up 0.2 pct at 3,119.53 points

* Major pharma stocks add most points to FTSEurofirst

* Some investors still expect near-term pullback

* Buy into ESTOXX 50 if it falls to 2,900 -Reyl CIO

By Sudip Kar-Gupta

LONDON, Jan 14 (Reuters) - European shares edged higher on Tuesday, buoyed by gains in major pharmaceutical stocks and by a rebound in U.S. equities after U.S. December retail sales rose above forecasts.

Investors with a longer-term view out towards the end of 2014 said the broader upwards trajectory for European equities remained intact, but some expected a near-term pullback which could occur if European company results miss market forecasts.

The pan-European FTSEurofirst 300 index, which rose 16 percent in 2013, closed up 0.2 percent at 1,326.37 points. The euro zone's blue-chip Euro STOXX 50 index also rose 0.2 percent to 3,119.53 points.

British drugmaker AstraZeneca (NYSE: AZN - news) rose 2.5 percent after forecasting it would return to growth faster than analysts predict.

Rival drugmaker Shire (LSE: SHP.L - news) also rose 2.8 percent after stating that its 2013 earnings growth should hit the upper end of its forecasts, and gains in those British firms enabled their French rival Sanofi (NasdaqGM: GCVRZ - news) to close up 1.3 percent.

Together, AstraZeneca, Shire and Sanofi added the most points to the FTSEurofirst 300 index.

Cyrille Urfer, head of asset allocation at Swiss bank Gonet, felt equities remained the asset class of choice, due to the better returns available from the stock market compared to bonds and cash, where returns have been hit by record low interest rates set by major world central banks.

"There is no alternative to the equity market in terms of generating the types of return that investors are looking for," said Urfer.

However, other investors felt future gains on equity markets, which have seen U.S stock markets and Germany's benchmark DAX equity index hit record highs, would be limited until corporate earnings start to improve.

EARNINGS-RELATED PULLBACK?

U.S. stocks fell sharply on Monday after a number of mid-sized companies posted weak earnings or forecasts, and there was further evidence of anaemic corporate results on Tuesday.

3D printer maker Stratasys (NasdaqGS: SSYS - news) and video game retailer GameStop (NYSE: GME - news) both forecast on Tuesday results below market estimates.

"There is no room for disappointment in the earnings season for the first quarter," said Francois Savary, chief investment officer at Swiss bank Reyl.

Savary said the Euro STOXX 50 could drop to the 2,900 level during the first quarter of this year, but added this could be a good buying opportunity as he expected the index to then recover and end 2014 at 3,400 points.

Goldman Sachs (NYSE: GS-PB - news) , in a strategy note this month, said the U.S S&P 500 index, which has hit record highs, had a "67 percent probability of a 10 percent drawdown during 2014".

Goldman cut its rating on the U.S. equities to "underweight" on a three-month basis, but it remained "overweight" on European equities.

Andreas Clenow, hedge fund trader and principal of Zurich-based ACIES Asset Management, said investors were getting nervous in the short term even though the longer-term outlook was positive, with the global economy slowly recovering.

"I think a lot of people are getting nervous at this point. I don't see an end to the bull market yet, but there is a high probability of a move down before we then move up."