European shares buoyed by oil stocks; KBC, Zurich lead gainers

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* FTSEurofirst 300 up 0.5 percent

* Oil stocks lead sectoral gainers

* KBC, Zurich rise after results

* Aegon, Generali slump as profits disappoint

By Danilo Masoni and Sudip Kar-Gupta

MILAN/LONDON, May 12 (Reuters) - European stocks rose on Thursday on the back of oil sector gains, with KBC Groep and Zurich Insurance among the leading gainers after results.

The FTSEurofirst 300 index was up 0.5 percent by 1029 GMT, paring early losses of as much as 1 percent.

The STOXX 600 Oil & Gas index rose 1.6 percent, making it the biggest sectoral gainer and reversing initial weakness on the back of a recovery in crude oil prices.

Oil rose towards six-month highs, supported by data showing tightening supply in addition to a surprise drop in U.S. crude inventories.

KBC rose 8 percent after the Belgian financial group posted better-than-expected quarterly net profit, as increasing customer deposits, loans and higher insurance income made up for some of the group’s increased tax bill.

Zurich Insurance rose more than 6 percent after swinging back to profit that beat analysts’ expectations.

German utility RWE rose 8 percent after its first-quarter operating rose more than expected, helped by an unusually high earnings contribution from its trading and gas midstream division.

“The market is showing some strength but there is no particular catalyst behind,” Anthilia Capital Partners’ Chief Investment Officer, Andrea Cuturi, said.

Earnings season in Europe had been disappointing, even though that might have already been priced in, Cuturi said.

According to data from Thomson Reuters StarMine, 61 percent of the companies on the pan-European STOXX 600 index have beaten or met market forecasts with their first quarter earnings, although many have done so by cutting costs to offset lower revenues.

Among other standout movers, Italian insurer Generali fell 3.2 percent after weak interest rates and fewer capital gains sent its net profit down 12 percent to 1.163 billion euros, missing expectations.

Aegon was one of the worst-performing stocks in the region. It slumped 7.8 percent after the Dutch insurer reported worse-than-expected first-quarter underlying pretax profit of 462 million euros.

Credit Agricole also fell 4 percent after the French bank reported a 71-percent fall in quarterly net income.

($1 = 0.8763 euros)

Today’s European research round-up

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Mike Dolan, Markets Editor EMEA. (Editing by Louise Ireland)