Banks boost Europe stocks; US housing data eyed
* FTSEurofirst 300 up 0.5 pct, up for third straight day
* Banks rally, now up 110 pct since early March
* Steelmakers gain ground after Salzgitter' CEO comments
* For up-to-the-minute market news, click on [STXNEWS/EU]
PARIS, May 27 (Reuters) - European stocks were up 0.5 percent around midday on Wednesday, led by banks such as HSBC (HSBA.L), while investors braced for U.S. housing data, hoping to see signs that the troubled sector is reaching a bottom. Steelmakers also climbed, propelled by positive comments on the sector by Salzgitter's (SZGG.DE) CEO. Salzgitter rose 2.6 percent and ArcelorMittal (ISPA.AS) added 4.3 percent.
At 1047 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 0.5 percent at 869.08 points. The index has gained 35 percent since hitting a record low in early March, but is still down 47 percent from a multi-year high reached in mid-2007.
"The market is very sensitive to every bit of macro data --just look at how stocks quickly bounced back on Tuesday after the U.S. consumer confidence figures -- so any signs of stabilisation in the housing market will be seen very positively by investors," said Christian Jimenez, president of Imene Investment partners, in Paris.
"But overall, the rally remains fragile, and we could see a selloff when people realise how damaging for the U.S. economy is GM's bankruptcy, and when financial institutions start to unveil losses from credit card operations, which could become the next big writedown wave," he said.
General Motors Corp GM.N on Wednesday prepared to face the fallout from a failed debt exchange that brings the automaker closer to a bankruptcy filing expected by the end of the month.
Banks led the gains on Wednesday, with HSBC (HSBA.L) up 2.2 percent, BNP Paribas (BNPP.PA) up 2.3 percent and UBS (UBSN.VX) up 2.4 percent.
Pharmaceutical and food and beverage stocks fell, as investors shied away from defensives and bought cyclicals.
AstraZeneca (AZN.L) was down 2.2 percent, while GlaxoSmithKline (GSK.L) fell 0.8 percent and Nestle (NESN.VX) dropped 1 percent.
Across Europe, Britain's FTSE 100 .FTSE was down 0.06 percent, Germany's DAX .GDAXI was up 0.2 percent and France's CAC .FCHI was up 0.6 percent. Wall Street futures SPc1 DJc1 NDc1 were mixed.
European media stocks rose, with the DJ STOXX European media index .SXMP up 1.4 percent after Goldman Sachs issued an upbeat note on the sector, raising price targets and upgrading a number of companies' recommendations.
The broker upgraded ITV (ITV.L) to "buy" from "sell" and added the commercial TV broadcaster to its "conviction buy" list, while it raised Germany's Premiere PREGn.DE to "buy" from "neutral".
It also lifted JC Decaux (JCDX.PA), TVN TVNN.WA and Johnston Press (JPR.L) to "neutral" from "sell".
ITV was up 9.8 percent, Premiere gained 9.6 percent and JCDecaux rose 6.2 percent.
The U.S. home sales data, due at 1400 GMT, comes one day after U.S. consumer confidence came better than expected, sparking a rally in equities.
"It's a sensible conclusion that we have avoided a depression, and while we're admittedly in a deep recession, the terrain we are walking on has stabilised and the macroeconomic data are producing rays of hope for the second half," said Franz Wenzel, strategist at AXA Investment Managers.
(Additional reporting by Sitaraman Shankar in London; editing by Simon Jessop)
