France's CAC hits 5-1/2-year high, European shares up

* FTSEurofirst 300 rises 0.2 percent

* Vodafone rises 2.8 pct, top gainer

* AXA (Paris: FR0000120628 - news) slips after disappointing results

By Atul Prakash

LONDON, Feb 21 (Reuters) - European shares climbed higher on Friday, with France's CAC 40 hitting a 5-1/2-year peak, as investors took their lead from stronger equities on Wall Street and in Asia following robust U.S. factory data.

At 0901 GMT, the FTSEurofirst 300 index of top European shares was up 0.2 percent at 1,341.29 points after gaining as much as 1,345.26. the highest since late January. France's CAC was up 0.1 percent after hitting a level not seen since 2008.

Wall Street's S&P 500 gained 0.6 percent on Thursday and Japan's Nikkei gained almost 3 percent on Friday, lifted by data showing U.S. factory activity accelerated at its fastest pace in nearly four years in February, a bullish indicator after some disappointing data.

"It is a positive sign that the U.S. economy is improving," David Battersby, investment manager at Redmayne-Bentley, said. "And if the economy is improving, then they will be sucking in imports. Things are getting back on track."

"Look at the companies that are international brands and have strong emerging market exposure because that's where, after the recent fallout, we have value," he said, adding that companies such as GlaxoSmithKline (Other OTC: GLAXF - news) , Unilever (NYSE: UL - news) and Diageo (LSE: DGE.L - news) were quite attractive.

Among the top risers, Vodafone advanced 2.8 percent to the top of the FTSEurofirst 300's gainers' list as investors bought up the stock ahead of the completion of the sale of its stake in Verizon Wireless to U.S. peer Verizon (NYSE: VZ - news) .

The deal will tee up an $84 billion payout in cash and shares at the end of February, which many may look to reinvest in UK stocks such as Vodafone.

"Certainly holders of Vodafone tend to be institutional and will play the re-weight somewhat by the book. Re-investment back into the Vodafone stub itself is certainly occurring apace," Monument Securities director Andy Ash said.

Bucking the trend, Europe's No. 2 insurer AXA fell 2.5 percent after posting a lower-than-expected quarterly profit, while Kering (Other OTC: PPRUF - news) , owner of the Yves Saint Laurent, Bottega Veneta and Gucci brands, dropped 3.5 percent after reporting a sharply lower full-year profit.

Despite some soft results Friday, data shows the earnings season in Europe has been relatively positive so far.

About 60 percent of STOXX 600 companies have reported results the season, of which 59 percent have met or beaten profit forecasts, with net profits rising 1.2 percent year-over-year on average, Thomson Reuters Starmine data shows.

Overall, investors remained positive on European stocks, with figures showing further brisk inflows into the region.

A poll by Thomson Reuters Lipper of 102 U.S.-based funds invested in European equities, which include exchange-traded funds' (ETFs) holdings, shows the funds added $502 million into European equities in the seven-day period to Feb. 19, a 34th straight week of net inflows - marking the longest streak of weekly inflows since Lipper started to monitor flows in 1992.

So far this year, U.S.-based funds have added about $4.6 billion into European equities.

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