* FTSEurofirst 300 up 0.8 pct, hits new 5-1/2-yr high
* Personal & household goods shares top gainers
* Watchmaker Swatch advances on positive outlook
LONDON, Jan 10 (Reuters) - European equities hit a new 5-1/2-year high on Friday, with personal goods boosted by an update from watchmaker Swatch and peripheral euro zone stocks adding to brisk gains made so far this year.
Swatch Group rose 4.6 percent after saying it expected "dynamic growth" this year, easing concerns of a downturn in export destination China.
The world's largest watchmaker, which owns luxury brands such as Omega and Breguet, helped the STOXX Europe 600 Personal & Household Goods index to gain 1.3 percent and hit the top spot on the sectoral gainers' list.
"Consumer confidence in the European Union has risen strongly in the past six months and the economic recovery will bolster it further. The personal and household goods sector is likely to profit the most from an expected rise in demand," Christian Stocker, strategist at UniCredit in Munich, said.
Other luxury goods companies also rode on the positive momentum, with Richemont, the maker of Cartier jewellery and IWC watches, up 3.6 percent, and British luxury brand Burberry up 2.3 percent. Italy's Luxottica , the world's top premium eye wear maker by sales and owner of Ray-Ban and Oliver Peoples brands, gained 3.3 percent.
"Luxury goods will be in demand this year as an improving economic outlook in developed markets is also good for emerging markets," said Didier Duret, chief investment officer at ABN-AMRO Private Banking, referring to the popularity of European luxury goods in markets such as China, Japan and India.
Duret expects improving global economic conditions and supportive central banks to keep driving the markets higher this year.
"Strong equities are reflecting the sweet spot the central bankers are providing for the market. Investors believe that we are way off higher interest rates and the European economy is on a good footing."
At 1140 GMT, the FTSEurofirst 300 index of top European shares was up 0.8 percent at 1,325.49 points, with Spain's IBEX rising 0.9 percent, Italy's FTSE MIB gaining 0.6 percent, Athens's ATG up 0.8 percent and Lisbon's PSI 20 advancing 0.7 percent.
The peripheral equity indexes are up 4 to 12 percent this year, helped by recent demand for Ireland's first bond sale since it exited its EU/IMF bailout and on hopes Portugal will be able to exit its bailout programme this year as planned.
The indexes have outperformed the FTSEurofirst, which is up just 0.7 percent in 2014. The pan-European index set a new 5-1/2-year high on Friday, just a shade higher from Thursday's peak since mid-2008, but investors stayed cautious before U.S. jobs data later in the day that could erode gains.
According to a Reuters poll, non-farm payrolls rose by 196,000 jobs last month, but the survey was conducted before Wednesday's data, which showed the private sector hired staff at the fastest pace in 13 months in December.
Robust data could prompt the U.S. Federal Reserve to move forward with plans to further wind down its quantitative easing programme. A stimulus cut is seen as negative for shares as it lowers liquidity.
Among individual movers, Lufthansa rose 7.7 percent, with traders pointing to positive broker comments and a company presentation forecasting a shrinking 2014 fuel bill. Tullow Oil rose 4.9 percent after media speculation it could be a bid target for Statoil.