UPDATE 1-European shares hit 5-1/2 year highs on improving economic outlook
* FTSEurofirst 300 up 1 percent, highest since 2008
* EuroSTOXX 50 also at 5-1/2 year peaks
* World Bank lifts growth outlook for first time in three years
LONDON, Jan 15 (Reuters) - European shares scaled fresh 5-1/2 year highs on Wednesday, buoyed by strong data and a brighter outlook for the global economy, as well as by easing regulatory concerns about euro zone banks.
Financial stocks provided the biggest boost to the FTSEurofirst 300 index after the European Central Bank said lenders will not be required to adjust sovereign debt portfolios they hold to maturity to reflect current market values.
The biggest gainers, such as Societe Generale and B P Milano, have large exposure to sovereign bonds in the region.
The sector is already up 10.7 percent this year. It received a boost this week when banking regulators agreed to ease regulation of balance sheets to try to avoid crimping financing for the world's economy.
"Euro zone banks had good news from Basel at the beginning of the week, and it looks like regulators are lessening the regulatory burden on the banking sector," Gerard Lane, equity strategist at Shore Capital, said.
"That regulatory burden has been seen to be a burden on economic recovery ... and there can be a vicious cycle. As soon as there's a recovery, banks will be able to repair themselves."
The market gains were broad-based, with more than two gainers on the FTSEurofirst 300 for every faller. The overall index closed up 1.0 percent at 1,339.82 points, hitting levels last seen in 2008.
The EuroSTOXX 50 index of euro zone blue chips rose 1.6 percent, also setting 5-1/2 year highs.
"There are a lot of factors that are on the same page to lead the market," said Stephane Ekolo, strategist at Market Securities. "The European equity market is a good place to be for 2014, that's on the fact that Europe is stabilising and, going forward, people expect it to grow. If we have growth that should help the market. That's what we were missing - growth."
Investors are counting on an economic pick-up to filter through to higher company earnings and extend a rally in equities that has been mostly driven by central bank support.
The World Bank raised its forecast for global growth, saying the world economy had reached a "turning point," with fiscal austerity and policy uncertainty no longer weighing as heavily on most richer economies.
Trade data from the euro zone, showing rising exports from the periphery was another positive factor while factory conditions in New York state jumped to their best level in 20-months in January, offering one of the first glimpses of activity in the world's biggest economy this year.
Burberry offered early signs of rising consumer demand, posting a 14 percent rise in underlying retail revenue in the Christmas quarter. Shares in the luxury group rallied 4.6 percent, their biggest one-day rise in 15 months.
Signs of improvement lifted German airline Lufthansa , by 4.4 percent after Frankfurt airport operator Fraport posted a rise in passengers.