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UPDATE 1-Tata Steel says Europe recovery supporting steel demand

* Q4 net income 10.36 bln rupees vs est. 9.64 bln rupees

Net sales 420.18 bln rupees vs est. 391.9 bln

* Says EU steel use to remain low due to global overcapacity

(Adds detail)

NEW DELHI/MUMBAI, May 14 (Reuters) - Tata Steel Ltd said a phase of solid economic growth in Europe was supporting a recovery in steel demand in its main market, which also helped the company post results that easily beat analysts' estimates in the March quarter.

The strong showing in Europe would come as a relief to the company's new management, which has intensified cost cuts and focused on high-margin products to cope with softness in the region's economy.

Tata Steel got a foothold in Europe through its $13 billion acquisition of Britain's Corus in 2007.

"Europe appears to be entering a phase of solid economic growth, which is supporting a recovery in steel demand," said Karl-Ulrich Köhler, chief executive of Tata Steel in Europe, which is also its biggest production centre.

"But EU steel use will remain at low levels historically against a background of continuing global overcapacity."

ArcelorMittal, the world's top steelmaker, said last week that prospects for Europe and the United States were encouraging and it was cautiously optimistic for the rest of 2014.

At 54, Markit's final Eurozone Manufacturing Purchasing Managers' Index (PMI) in January was the highest since May 2011. The manufacturing recovery accelerated at the start of the April quarter, a survey showed.

Tata Steel's bigger-than-expected fourth-quarter profit was also helped by product launches in Europe throughout the year, 30 in total. The volume of new products sold in the region rose more than 75 percent in 2013/14 compared with a year earlier, the company said in a statement.

Net income hit a three-quarter high of 10.36 billion rupees ($173 million) in the three months ended March 31, compared with a year-ago loss. Net sales jumped 23 percent to 420.18 billion rupees.

Analysts on an average had expected a profit of 9.64 billion rupees on sales of 391.9 billion, according to data from Thomson Reuters StarMine.

($1 = 59.7800 Indian Rupees)

(Reporting by Krishna N Das and Siddesh Mayenkar; Editing by Matt Driskill and David Holmes)