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Europe shares extend recovery rally, U.S. data helps

* FTSEurofirst 300 gains 0.8 pct, up 3.5 pct since mid-March

* Easing tensions over Ukraine, U.S. data help lift mood

* Spanish stocks outperform as country's recovery 'on track'

* "It's not time to look at P/E ratios" -Fidelity's Anand

PARIS, March 26 (Reuters) - European stocks rose on Wednesday as easing tensions over Ukraine and positive U.S. economic data helped the market extend the recovery rally that started in mid-March.

Spanish stocks outperformed the broader market, with lenders Banco Santander and BBVA both up 2.4 percent, rallying after the Bank of Spain said the country's economic recovery was on track. It saw GDP expanding by 1.2 percent in 2014, above government forecasts.

Boosting the mood on both sides of the Atlantic, U.S. data showed orders for long-lasting manufactured goods rebounded last month and shipments snapped two consecutive months of declines, while growth in the private sector accelerated in March at a faster pace than in the previous month, reassuring investors on the country's economic growth.

Also helping sentiment, tensions between the West and Russia over Ukraine were easing on Wednesday, after U.S. President Barack Obama and allies agreed to hold off on further economic sanctions.

A number of European blue-chips with big exposure to Russia featured among the top gainers, with Finnish tyre maker Nokian Renkaat gaining 3.1 percent and Austrian lender Raiffeisen Bank International up 1.5 percent.

At 1553 GMT, the FTSEurofirst 300 index of top European shares was up 0.8 percent at 1,321.20 points. The benchmark index has risen 3.5 percent since mid-March.

"The door is open for indexes to move back to 2014 highs, and we're not far from these levels. There are just no signals of weakness, and the buying pressure is very powerful," Aurel BGC chartist Gerard Sagnier said.

Spanish stocks surged, with Madrid's IBEX gaining 1.6 percent, reflecting investors' bet that euro zone peripheral economies are picking up pace.

Paras Anand, head of European equities at Fidelity Worldwide Investment, saw further big gains for European stocks, even if valuation ratios have already moved back to long-term averages.

"With investors shifting out of fixed income, the demand for European stocks will be growing in the next year, and that's much more important than price-to-earnings ratios," he said.

"We could be at the forefront of a very strong recovery in corporate activity in Europe, the amount of cash in balance sheets is tremendous. It's not time to look at P/E ratios, there are many more metrics out there that are more interesting."

Among the top gainers on Wednesday, Standard Life added 6 percent after buying Ignis Asset Management.

Europe bourses in 2014: http://link.reuters.com/pap87v

Asset performance in 2014: http://link.reuters.com/gap87v

Today's European research round-up

(Editing by Catherine Evans)