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UPDATE 2-European shares at fresh highs on earning optimism, dealmaking

* STOXX 600 up 0.4 pct at fresh 2 1/2 year high

* Autos lead gainers on Continental overhaul hopes

* Altice rallies on US unit spin-off plan

* Global earnings revisions at all-time high - Citi (Recasts, adds details, closing prices)

MILAN/LONDON, Jan 9 (Reuters) - European shares rose for a fourth straight session on Tuesday, lifted by strength among cyclical stocks and optimism about further growth in company earnings.

Expectations of possible dealmaking in the auto industry and a weaker euro also helped, pushing the STOXX 600 up 0.4 percent at 400 points, its highest since August 2015 and just a few points below its all-time peak of 414.

The rise came as a global stock benchmark touched another record high with confidence in another strong earning season offsetting worries over valuations becoming too elevated.

"If growth does not disappoint and companies deliver solid earnings, I don't see risk on valuation," said Valentin Bissat, equities strategist at Mirabaud Asset Management.

According to Citi, global earnings revisions were positive for the 14th week in a row, recording the best weekly upgrades since its data started in 2000, led by cyclicals.

Even though high earning revisions are usually seen at the start or end of the economic or market cycle, strategists at the U.S. bank said it was too early to call the end of this cycle.

Top gainer on the STOXX on Tuesday was Altice.

Its shares rose 10.5 percent as investors welcomed a decision to spin off its U.S. unit and simplify the indebted telecoms and cable firm's structure.

Traders said any move to reduce debt would be well received by the market, and analysts at brokerage Raymond James said the move could also make the Altice European arm a possible acquisition target for rival French telecoms companies.

Auto stocks cemented their position as the biggest sectoral gainer so far this year, rising 1.4 percent.

Continental rose 5.4 percent on expectations of a possible corporate overhaul.

Continental is still looking at its corporate structure as part of a review launched more than a year ago, a source close to the matter said on Tuesday following a media report about a possible breakup of the car parts maker.

Fiat Chrysler rose to another record high, up 2 percent. Traders cited continued talk the carmaker could look at strategic deals such as spin-offs and disposals in the last year with CEO Sergio Marchionne at the helm at the company.

Commodities also continued their climb, with stronger metals prices helping the STOXX 600 materials index rise 1.2 percent to hit its highest since March 2012.

Financials provided the biggest boost to the STOXX as optimism over Europe's economic growth prevailed.

"In an environment of solid growth and rising long-term yields in Europe, financials and value stocks in general are likely to outperform, as well as energy," said Mirabaud's Bissat, who is overweight on financials stocks.

Elsewhere among cyclicals, Germany's Siemens rose 0.5 percent after its industrial production and exports rose more than expected in November.

Germany-listed shares in South African retailer Steinhoff fell 5.4 percent after the ECB sold its Steinhoff bond at a loss as the company grapples with an accounting scandal.

Morrisons, up 2.4 percent, was among top gainers after the UK retailer reported a stronger than anticipated Christmas trading season. Marks & Spencer also gained.

(Reporting by Danilo Masoni; editing by Mark Heinrich)