Improving economic data sends European shares to 2-1/2 mth high
* FTSEurofirst 300 up 0.6 pct, Euro STOXX 50 up 0.5 pct
* Upbeat data boosts sentiment ahead of GDP readings
* E.ON rallies as Q2 results beat expectations
By Francesco Canepa
LONDON, Aug 13 (Reuters) - European shares hit a 2-1/2 month high on Tuesday as upbeat economic data reinforced expectations the euro zone is finally crawling out of recession.
Rises in the ZEW German sentiment index and in euro zone industrial production lifted investor sentiment and set a positive backdrop for Wednesday's release of second-quarter euro zone GDP data, expected to show the currency bloc has emerged from recession.
The data helped the FTSEurofirst 300 gain 0.6 percent to 1,236.99 points, within sight of its 2013 peak at 1,258.09. The euro zone's blue-chip Euro STOXX 50 ended up 0.5 percent at 2,841.61 points.
"Provided that the data continues to come in like we saw (with) the ZEW and industrial production today ... that should continue to build positivity into the market," John Bilton, head of European investment strategy at Bank of America Merrill Lynch, said.
"There is still some decent valuation support and ... positioning support sits behind European equities just now."
A BofA-ML survey showed investors increased their allocation to euro zone stocks to its highest in 5-1/2 years, but positioning still lagged optimism about growth in the region, which hit a nine-year high.
The STOXX Europe 600 has risen around 12 percent since June, lifted by improving economic data and a European Central Bank pledge to keep monetary policy accommodative.
The index is trading at 12.7 times its expected earnings for the next 12 months, above its 10-year average and leading some short-term investors to take a cautious view.
Stewart Richardson, a partner at RMG Wealth Management, said improvements on the macro front were priced in and European shares were unlikely to make much headway until data showed more robust economic growth and credit creation.
"With the equity market at the top of their recent range and everyone focusing on the slightly better-than-expected numbers, there's nothing there for us," said Richardson, who helps manage $95 million worth of assets.
Some forecast-beating corporate reports, especially from domestically focused European companies such as utilities , have also supported shares in the past month.
All utilities in the STOXX Europe 600 index have met or beaten analyst estimates so far this earnings season, making them the best-performing sector. In comparison, 45 percent of all companies in the index have missed consensus forecasts.
German utility E.ON rose 2.2 percent on Tuesday after reporting slightly better than forecast profits for the first half.
Volume in the shares was nearly 60 percent higher than their average for the past three months, standing out on a day when FTSEurofirst 300 turnover was around 74 percent of its average.