Better growth outlook boosts European shares
* FTSEurofirst 300 closes 0.6 percent higher
* Improving economic outlook, better earnings help
* easyJet boosts travel and leisure sector
LONDON, July 24 (Reuters) - European shares climbed to an eight-week closing high on Wednesday, led by stocks that generally perform better during an economic recovery, with robust euro zone surveys and some strong company results boosting sentiment.
The latest 10 percent rally since a seven-month low just a month ago appeared to have more steam compared to the rise in April and May that saw the FTSEurofirst 300 index gain 10 percent before falling 12 percent in the following weeks, analysts and fund managers said.
The index closed 0.6 percent firmer at 1,214.63 points, the highest close since late May.
Wednesday's highlight was a sharp rise in cyclicals, which generally outperform others during sound economic conditions and fall faster on signs of a slowdown, as an improving growth outlook in Europe and the United States prompted investors to buy into sectors like travel, autos, banks and construction.
"We are now looking at the European market a little bit more positively and cautiously buying into the dips ... equities are in a sweet spot in terms of improving economic indicators and as earnings are starting to surprise on the positive side," Oliver Wallin, investment director at Octopus Investments, said.
Analysts said surveys showing the euro zone's private industry unexpectedly bounced back to growth this month and new U.S. home sales surged to a five-year high in June had improved investor appetite for risk, offsetting concerns of a reduction in U.S. stimulus measures.
The improving economic outlook was also reflected in company earnings, with British chip designer ARM Holdings beating expectations with a 30 percent rise in adjusted pretax profit in the second quarter and easyJet forecasting earnings ahead of expectations.
EasyJet shares were 3.7 percent higher after setting a record high, helping the European Travel and Leisure sector to the top gainers' slot. ARM shares rose more than 4 percent before surrendering gains later on profit taking.
However, technical analysts advised some caution in the near term, but said the Euro STOXX 50 index's medium- to longer-term outlook remained positive. The index rose 1 percent to 2,752.25 points on Wednesday.
"For the very short term, the bias is on the downside as the index's rally stopped near its horizontal support resistance of 2,750," Roelof-Jan van den Akker, senior technical analyst at ING Commercial Banking, said.
"We are still in an uptrend but currently seeing that prices are failing to convincingly break the horizontal resistance level. That in itself is not bearish but suggests that we could see some selling pressure within the uptrends."