* FTSEurofirst 300 up 1.2 pct percent
* Barclays, ING lead banks
* Sentiment remains tense
By Christoph Steitz
FRANKFURT, Jan 26 (Reuters) - European shares were higher at midday, led by financials after updates from Barclays (BARC.L) and ING ING.AS triggered a recovery in the battered sector on Monday.
At 1200 GMT, the FTSEurofirst 300 .FTEU3 index of leading European shares was up 1.2 percent at 769.68 points after falling in 12 of the past 13 sessions.
Barclays rocketed 56 percent after saying it did not need to raise fresh funds, and had seen a good start to 2009 with high customer activity.
ING rose 22 percent after saying it would tap into 22 billion euros ($28.5 billion) of Dutch state loan guarantees for its troubled loan portfolio, and that its chief executive was stepping down.
“The news about Barclays was certainly better than expected and, to a certain extent, supports sentiment in the market,” said Heinz-Gerd Sonnenschein, equity strategist at Postbank in Bonn, Germany.
“It is good that banks come clean with their situation and that is rewarded. However, a general all-clear for the market cannot be given,” he said.
The DJ Stoxx banks index .SX7P has lost 17.2 percent so far this year as fears about banks’ funding situation returned.
Governments have launched huge stimulus packages and created rescue funds for banks to help limit the impact of a recession that has gripped some of the world’s biggest economies.
Dutch electronics giant Philips Electronics (PHG.AS) rose 5.2 percent after posting its first quarterly loss since 2003 but saying it would accelerate its restructuring programme.
“The economic environment remains extremely fragile,” said Commerzbank strategist Hans-Juergen Delp. “Companies such as Nokia and Microsoft have already been battered and the negative sentiment is likely to return fast,” he said.
Nokia NOK1V.HE was the top decliner, down 4 percent. Deutsche Telekom and France Telekom lost 1.1 percent and 1.9 percent, respectively.
Other defensive stocks also fell. Drugmaker Sanofi-Aventis (SASY.PA) lost 2.1 percent, failing to gain support from Pfizer’s PFE.E $68 billion acquisition of Wyeth WYE.E.
The FTSEurofirst 300 is already down 9 percent so far this year, driven by the big losses in bank shares, after losing 45 percent in 2008 due to a market crisis that pushed major economies into recession and crimped corporate earnings. (Additional reporting by Sitaraman Shankar, editing by Dan Lalor)