* FTSEurofirst 300, Euro STOXX 50 both up 0.3 pct
* Putin’s comments help market pare losses
* Equity risk premium well above long-term average -ING IM
By Blaise Robinson
PARIS, Aug 14 (Reuters) - European stocks inched higher around midday on Thursday, adding to this week’s tentative rebound, although weaker-than expected economic output data from Germany and France limited the gains.
By 1100 GMT, the pan-European FTSEurofirst 300 index was 0.3 percent higher at 1,330.21 points, while the euro zone’s blue-chip Euro STOXX 50 index was also up 0.3 percent at 3,066.83 points.
Indexes pared early losses and turned positive following comments from Russian President Vladimir Putin who said Russians don’t need conflict with the outside world.
“We must calmly, with dignity and effectively build up our country, not fence it off from the outside world,” Putin said during a visit to Crimea, which Russia annexed from Ukraine in March. “We need to consolidate and mobilise but not for war or any kind of confrontation ... for hard work in the name of Russia.”
European stocks have tumbled in the past few weeks, with the FTSEurofirst 300 down 5 percent since late June, knocked lower by fears of an escalation of the Ukrainian crisis and tensions between the West and Moscow.
Thursday’s rebound was limited, however, by concerns over the pace of growth in the euro zone’s two biggest economies.
Data showed Germany’s economy suffered a surprise contraction - its first in more than a year - in the three months to June, and France slashed its growth forecasts for this year and the next after its economy failed to grow in the second quarter.
“The GDP figures are not reassuring, and it’s adding to the fears over the weak inflation figures for the euro zone. The scenario of a steady economic recovery looks quite shaky now,” Barclays France fund manager Thierry Claude said.
The weak GDP data also pushed lower German 10-year bond yields, which briefly traded below 1 percent for the first time ever, reflecting bets for fresh stimulus from the European Central Bank.
While the weak data clouded the macro economic picture in the euro zone, it was also seen boosting the chances of an ECB move to shore up the economy via an asset-purchase programme, which could drive up equity prices in the long run.
Some strong German corporate results also supported to the market on Thursday.
TUI AG rallied 5 percent after it said it is very confident its full-year results will reach the upper end of its target forecast after third quarter profits almost doubled.
Shares in steelmaker ThyssenKrupp added 1.7 percent as the German group said it may return to a net profit this year.
The recent correction in equities worldwide has boosted the asset class’s risk premium to between 100-200 basis points above their long term average, Patrick Moonen, senior multi asset strategist at ING IM said.
“Taking risk in equities is well rewarded: we expect that over the next one or two years, these risk premiums will gradually normalise,” Moonen wrote in a research note.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today’s European research round-up
Additional reporting by Francesco Canepa and Sudip Kar-Gupta in London; Editing by Ruth Pitchford