Miners help European shares to hit 2-week high

(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)

* FTSEurofirst 300 index rises 1 pct

* Miners feature among top gainers

* Taylor Wimpey (LSE: TW.L - news) surges after update

By Atul Prakash

LONDON, May 17 (Reuters) - European shares hit a two-week high on Tuesday, with companies such as Taylor Wimpey and Vodafone gaining after their encouraging updates and miners tracking a rally in major industrial metals.

The pan-European FTSEurofirst 300 was up 1 percent at 1,328.96 points by 0814 GMT after rising to 1,331.51, the highest since early May. However, the index, which closed flat in the previous session, is still down 7.5 percent this year.

Miners were the top sectoral gainers, with the STOXX Europe 600 Basic Resources index rising 2.4 percent following a rise in major base metals such as copper and aluminium. Shares (Berlin: DI6.BE - news) in Anglo American (LSE: AAL.L - news) , Glencore (Xetra: A1JAGV - news) and BHP Billiton (NYSE: BBL - news) were up 3.7 to 5.9 percent.

"Markets are once again up on higher commodity prices. Nevertheless, we should not get carried away and chase the commodity complex higher as most of these markets are still very much over-supplied," Philippe Gijsels, head of research at BNP (Paris: FR0000131104 - news) Paribas Fortis, said.

"I expect quite a bit of volatility over the summer period."

Financial stocks were also in demand. European banks rose 1.5 percent, while Greek banks advanced 3.4 percent, with UBS (LSE: 0QNR.L - news) turning more positive on the Greek banking sector arguing that signs of progress in talks with Greece's lenders meant the sector could rebound.

"The starting point is very challenging and risks abound, but we see a fundamental investment case and valuations suggest upside potential," UBS analysts said, referring to Greek banks.

Some companies were helped by their positive updates. Taylor Wimpey advanced 6.2 percent after the housebuilder announced a new special payout, promising investors about 1.3 billion pounds ($2 billion) over three years, underpinned by strong demand for property in the UK.

Vodafone was up 2.5 percent after the world's second-largest mobile phone operator said its earnings growth would accelerate this year. The group said a programme to improve its networks had boosted demand in Europe and helped it to return to underlying growth in 2016 revenue and core earnings for the first time since 2008.

"Demand for data continues to grow strongly ... and Vodafone have invested heavily in infrastructure to capitalise on this," Steve Clayton, head of equity research at Hargreaves Lansdown (LSE: HL.L - news) , said.

Among mid-caps, Lookers (LSE: LOOK.L - news) , one of Britain's biggest car dealership firms, rose 6.4 percent after saying that it had a good start to the year with positive results in the first quarter.

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.

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Mike Dolan, Markets Editor EMEA.

(Additional reporting by Sudip Kar-Gupta; Editing by Tom Heneghan)