European shares up as Ukraine rebels allow improved access
* FTSEurofirst 300 index gains 0.9 percent
* Ukraine rebels hand over black boxes from Malaysian plane
* ARM Holdings surges after strong results
* Actelion gains as results revive M&A speculation
By Atul Prakash and Francesco Canepa
LONDON, July 22 (Reuters) - European equities bounced back on Tuesday partly in response to signs of improved cooperation from Ukraine's pro-Russian rebels who have agreed to hand over the black boxes from the Malaysian plane downed in Ukraine last week.
The handover and reports by international investigators of improved access to the wreckage of the airliner four days after it was shot down, came amid calls for broader sanctions against Russia for its support for the rebellion.
The prospect of harsher sanctions on Russia, combined Israel's escalating ground offensive in Gaza, have weighed on equities in the past week and traders expected the market to remain jittery.
"There will probably be some relief early on but with some risk-off remaining," Mike Reuter, a broker at Tradition, said. "There's no resolution to the conflict. Fighting in Donetsk continues and the Gaza conflict is also ongoing."
European Union foreign ministers were scheduled on Tuesday to discuss further penalties against Russia, but the most they are expected to do is to speed up the implementation of sanctions against individuals, and possibly companies, agreed in principle last week before the plane was brought down.
By 1045 GMT, the FTSEurofirst 300 index of top European shares was 0.9 percent higher at 1,368.14 points after falling 0.5 percent in the previous session. The market on Tuesday was also supported by some positive earnings reports.
ARM Holdings, which sells blueprints for chip designs, topped the gainers' list on the FTSEurofirst 300 Its shares surged 5.3 percent after the Cambridge-based firm posted a 9 percent rise in second-quarter profit.
"A solid start to the earnings season and improving risk appetite are helping to drive the equity market higher," Robert Parkes, equity strategist at HSBC, said.
"We are positive on the outlook for corporate earnings in Europe and believe that earnings are going to surprise on the upside."
Among other sharp movers, Actelion, Europe's largest biotech company, rose 3.8 percent after it hiked its 2014 profit forecast for the second time this year.
While the firm's chief executive said his strategy to stay independent was supported by shareholders, traders speculated on possible bids from larger firms such as AstraZeneca, Roche, GlaxoSmithKline or Novartis.
"Actelion is the answer to AstraZeneca's chronic pipeline shortage, GlaxoSmithKline's need for expansion and would be an easy morsel for Roche or Novartis to digest," Hobart Capital Markets trader Justin Haque said.
Elsewhere, corporate updates were less upbeat with French media group Publicis Group warning it would be "very difficult" to meet its annual target of 4 percent organic sales growth. Its shares fell 4.9 percent, the worst performer on the FTSEurofirst 300 index.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up (Additional reporting by Francesco Canepa. Editing by Jane Merriman)