* Euro STOXX 50 up 0.5 pct, FTSEurofirst 300 up 0.2 pct
* Strong euro zone data, Spanish results lift recovery hopes
* Earnings picture mixed; BASF falls after miss
By Francesco Canepa
LONDON, July 24 (Reuters) - Euro zone shares rose on Thursday as better-than-expected economic data and some strong corporate results in Spain injected some optimism about the region's recovery.
A survey showing the euro zone's private sector expanded at the fastest rate in three months in July helped dispel investor concerns after a string of disappointing data in recent months.
"People were over-responding to some of the weaker numbers," said Peter Westaway, head of the investment strategy group at Vanguard, noting that seasonal factors and geopolitical tensions in Ukraine had weighed on recent surveys.
"The underlying story is still intact, which is the recovery is ongoing but is weak."
The euro zone Euro STOXX 50 index was up 0.5 percent at 3,209.70 points, while the broader FTSEurofirst 300 index index was up 0.2 percent at 1,378.97 points by 1453 GMT.
The indexes slightly pared their gains after data showed U.S. new homes sales tumbling in June.
Spain's Ibex 35 index rose 1.7 percent, the strongest performer among major country indexes, after results from mid-sized lenders Banco Sabadell and Bankinter showed net income from lending rose at a higher-than-expected rate in the second quarter.
That in turn pointed to a sustained turnaround in the country's banking sector.
"As long as we have good results from this part of the P&L (profit and loss statement), a net income and a good capital ratio, the banks should have a slow but solid recovery," said Javier Bernat Valenzuela, an analyst at ESN/Beka Finance.
Shares in Sabadell and Bankinter rose 4.7 percent and 1.3 percent respectively.
Also striking a positive note on the Spanish economy, a recovery in the Spanish advertising market helped media group Mediaset Espana record a 58.6 bounce in earnings before interest, taxes, depreciation and amortisation in the first six months of the year.
Shares in the firm surged 8 percent, while its Italian parent company Mediaset added 6.7 percent. Italy's FTSE MIB was up 1.7 percent.
Portugal's PSI 20 rose for a second day, up 1.2 percent, after two major investors bought into Banco Espirito Santo, which had dragged down the Portuguese bourse in the past month amid financial concerns surrounding its founding family.
European indexes were further helped by telecoms gear maker Nokia, up 6.6 percent after it unveiled a stronger-than-expected quarterly profit margin in its core networks unit.
Overall, however, an early batch of second-quarter company results pointed to a mixed performance for European firms.
Germany's BASF, the world's largest chemicals company by sales, fell 2 percent as quarterly operating earnings rose slightly less than expected, partly due to a stronger euro.
Geopolitical tensions were also in focus. Under proposals considered by European Union governments on Thursday, the EU would target state-owned Russian banks vital to financing Moscow's faltering economy in the most serious sanctions so far over the Ukraine crisis. (Additional reporting by Lionel Laurent; Editing by Gareth Jones)