* Danone surges 5.2 pct after sales beat forecasts
* FTSEurofirst 300 and Euro STOXX 50 rise 0.4 pct
* Broader sentiment cautious as Italy elections loom
By Sudip Kar-Gupta
LONDON, Feb 19 (Reuters) - European shares edged higher on Tuesday, led by food group Danone after it posted forecast-beating sales, although broader market sentiment remained cautious before Italian elections at the weekend.
The pan-European FTSEurofirst 300 index ended a three-day losing streak to rise 0.4 percent to 1,163.46 points, while the euro zone’s blue-chip Euro STOXX 50 index also advanced by 0.4 percent to 2,627.40 points.
French company Danone led gainers across the region, rising 5.2 percent after the company beat sales forecasts and announced plans to cut costs, although it said profits could be hit in 2013 by the economic downturn in southern Europe.
Lingering worries over the euro zone’s sovereign debt crisis, which has hit southern European countries such as Spain and Italy hardest, have led to equity markets giving up some of the gains they made in January.
The Euro STOXX 50 index has fallen into negative territory since the start of 2013, after rising 14 percent last year, and some traders expected European equity markets to lose more ground this month before recovering again in April.
“Equity markets have generally had a good start to the year. Valuation continues to be supportive and many European corporates find themselves in a strong position financially,” said Rob Jones, co-head of pan-European equities at Union Bancaire Privee (UBP).
“However, economic indicators have been more mixed recently and political concerns have begun to resurface in Europe. We would expect European equity markets to make further progress in 2013 but we doubt that the trajectory will be in a straight line,” he added.
Berkeley Futures Associate Director Richard Griffiths said equity markets could fall this month, adding that the Euro STOXX 50 and Germany DAX could retreat by 3-4 percent over the coming month.
“I think any inroads to the upside will be hard to come by. I think we’re in for a period of consolidation, with the risk more to the downside,” he said.