Energy and food stocks help lift European shares
* FTSEurofirst 300 index rises 0.2 pct
* Euro zone Euro STOXX 50 index flat
* Traders see markets in sideways pattern but with potential to rise
* Central bank measures continuing to support equity markets -traders
By Sudip Kar-Gupta
LONDON, Sept 25 (Reuters) - European shares rose slightly on Tuesday, helped by gains in major oil and food stocks. Traders said recent central bank stimulus measures gave equity markets upward potential despite unresolved fears over the euro zone debt crisis.
The pan-European FTSEurofirst 300 index rose 0.2 percent to 1,117.99 points, recovering from a 0.3 percent dip on Monday. The euro zone Euro STOXX 50 index was broadly flat at 2,557.52 points.
European equity markets have rallied since July 26 when European Central Bank head Mario Draghi said he would do "whatever it takes" to protect the euro from the region's debt crisis. He followed that up on Sept. 6 with a plan to buy government bonds.
Stock markets received a further boost this month when the U.S. Federal Reserve said it would pump $40 billion into the economy each month until it saw a sustained upturn in the jobs market.
Although markets have dipped on persistent signs that the euro zone debt crisis is far from over, with Spain under pressure for a further bailout package, the Euro STOXX 50 index remains up by around 20 percent since late July.
"We're in for another sideways week, but with the potential to go higher. Overall, the underlying bias is still one of a positive note," said Mike Turner, European equity options broker at XBZ Ltd.
Several traders added that the moves by the ECB and the Fed should suffice to ensure that any equity market pull-back would be relatively limited, and that investors could use market declines to buy up stocks on the cheap.
"There's good underlying support for these markets, and any dips should be bought," said Berkeley Futures Ltd associate director Richard Griffiths.
SUEDZUCKER RISES BUT CONTINENTAL DROPS
German companies topped both the leader board and loser board on the FTSEurofirst 300 index.
Sugar refiner Suedzucker was the best-performing FTSEurofirst 300 stock, rising 2.8 percent after it increased its sales and earnings targets for the current financial year.
However, automotive supplier Continental AG fell 4.4 percent after shareholder Schaeffler sold Continental shares for 77.50 euros for around 1.6 billion euros.
Gains in major oil stocks also helped to keep markets in positive territory, with traders citing a Credit Suisse price target upgrade for Spanish energy group Repsol as the reason behind a 1.5 percent rise in Repsol's shares.
Central Markets senior broker Joe Neighbour said he saw European markets holding onto much of their recent gains, adding that he did not expect any fall on Germany's DAX index to go much beyond 7,250 from its current level of around 7,400 points.
"There's a bit of froth coming off the top of the markets, but the general uptrend will remain," he said.
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