* FTSEurofirst 300 up 0.3 pct, Euro STOXX 50 up 0.1 pct
* Spanish, Italian stocks resume sell-off
* Auto stocks knocked by worries over Chinese investigation
By Blaise Robinson
PARIS, Aug 5 European shares gained ground on
Tuesday in a tentative rebound following last week's sharp
sell-off, supported by forecast-beating results from blue-chips
including Deutsche Post.
M&A fever also helped, with Vivendi surging 3.6
percent after Telefonica unveiled a 6.7 billion euro
($8.99 billion) offer for the French firm's Brazilian business
GVT. Shares in Telefonica slipped 1.7 percent.
But despite the gains in core Europe, Southern European
markets fell sharply, resuming last week's retreat as investors,
rattled by the crisis at Portugal's Banco Espirito Santo
, further reduced their exposure to the region.
Shares in Italian lenders Banco Popolare and
Intesa SanPaolo lost 3.8 and 2.4 percent respectively,
while Spain's Bankinter fell 4.3 percent.
Milan's FTSE MIB lost 1.6 percent and Madrid's IBEX
fell 1.4 percent.
"Volatility is on the rise, which is quite typical during
summer months. With this correction knocking down the IBEX since
early July, I'm starting to see good buying opportunities," said
Margarita Rivas, senior investment strategist at GVC Gaesco
Valores, in Madrid.
The FTSEurofirst 300 index of top European shares
ended 0.3 percent higher, at 1,334.59 points.
European stocks trimmed their gains in afternoon trading
after Markit said its final U.S. services Purchasing Managers
Index (PMI) hit 60.8 in July - well above 50 which signals
expansion in economic activity - reviving speculation that the
U.S. Federal Reserve could start raising interest rates earlier
than previously expected.
The FTSEurofirst 300 has lost 4.6 percent in the past month,
as the prospect of tighter U.S. monetary policy, trouble at
Banco Espirito Santo and concern over the impact of fresh
sanctions on Russia led investors to book profits made earlier
"This is mostly a technical bounce after such a slide, but
the background remains the same: The Ukrainian crisis still
poses a serious risk to Europe, and I don't think it's priced in
already, especially by retail investors," said Riccardo
Designori, market analyst at Brown Editore in Milan.
Last week, the European Union and the United States unveiled
further sanctions against Russia, targeting its energy, banking
and defence sectors in the strongest international action yet
over Moscow's support for rebels in eastern Ukraine.
Russian news agencies reported on Tuesday that President
Vladimir Putin has ordered his government to prepare retaliatory
measures against the latest round of sanctions.
Around Europe, UK's FTSE 100 index rose 0.1 percent,
Germany's DAX index added 0.4 percent, and France's CAC
40 gained 0.4 percent.
On the earnings front, Deutsche Post gained 2.2
percent after reporting a better-than-expected profit.
Credit Agricole added 2.2 percent as the bank -
which took a 708 million euro hit from its stake in troubled
Portuguese lender Banco Espirito Santo BES.LS - still managed to
beat analyst expectations for second-quarter results.
Shares in automakers lost ground, with Fiat down
3.1 percent, Daimler down 1.2 percent and Volkswagen
down 1.6 percent, as traders cited worries over an
investigation by China's anti-monopoly authorities.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Editing by Hugh Lawson)