* FTSEurofirst 300 up 0.3 pct, Euro STOXX 50 up 0.6 pct
* Euro STOXX 50 set for biggest weekly return since December
* Moller-Maersk gains after regulatory win
* Fund flows, polls point to further gains for equities
By Alistair Smout
LONDON, March 21 A top European share index was set for its best week of the year on Friday although stocks exposed to Russia remained sensitive as investors assessed the impact of tit-for-tat sanctions over the Ukraine crisis.
Russia has annexed Crimea from Ukraine, a move condemned by the West, but Moscow's assertion that no other Ukrainian region would be subject to intervention helped European stocks to move higher on Monday and Tuesday.
"The longer this goes on, the more relaxed people are about it. There's generally been an avoidance of bloodspill, and it's been a relatively painless transition of Crimea from Ukraine to Russia," Alastair McCaig, analyst at IG, said.
"In contrast to this time last week, when we were nervous about what would happen over the weekend (in the referendum), there's a bit more of a relaxed mentality."
The euro zone EuroSTOXX 50 is up 2.8 percent so far for the week, set for its best weekly gain since December, while the pan-European FTSEurofirst 300 is up 1.7 percent in a weekly rise not seen in over a month.
The escalation of sanctions from the United States late on Thursday helped to peg back stocks that are the most exposed to Russia, with Danish brewer Carlsberg down 1.2 percent.
However, in general growth-sensitive stocks without direct exposure to Russia such as miners, banks and industrial firms were stronger, with traders saying that the new sanctions were no big shock to markets.
The FTSEurofirst 300 was up 0.3 percent to 1,309.84 by 0859 GMT, with the EuroSTOXX 50 up 0.6 percent.
The FTSEurofirst 300 ended Thursday roughly steady, after encouraging U.S. data prompted a rally from the morning's lows.
Stocks were hit in early deals of the previous session after Federal Reserve Chair Janet Yellen had hinted that rate rises could begin as soon as Q2 2015, earlier than the market expected, and a quartet of Fed speakers due to speak later on Friday will be scrutinised for any further details.
Danish shipping firm Moller-Maersk rose 2.2 percent, after its Maersk Line won regulatory approval for an alliance with two partners from the U.S. Federal Maritime Commission.
Crimea-related turmoil has left the FTSE Eurofirst 300 over 3 percent off the year's closing high towards the end of February, although medium term prospects for European equity remained healthy, analysts said.
The FTSEurofirst 300 had gained nearly 20 percent since the start of 2013 to that February peak, however.
A Reuters poll on Thursday found that European stocks will extend their rally in 2014, fuelled by a long-awaited rebound in corporate profits as the region's recovery picks up and global investors shift from emerging markets to Europe.
In addition, the Lipper poll of 103 U.S.-domiciled funds invested in European stocks showed they raked in a net $214 million, the smallest inflow since July 2013, although the funds still managed to extend their longest winning streak on record into a 38th week.
"The performance of stocks over the past couple of years has been spectacular, and has handily beaten returns on bonds," strategists at Barclays wrote in a note.
"Fundamentals continue to support our preference for stocks over bonds."
Europe bourses in 2014: link.reuters.com/pad95v
Asset performance in 2014: link.reuters.com/rav46v
Today's European research round-up
(Additional reporting by Blaise Robinson; Editing by Angus MacSwan)