* China deals boost Alcatel Lucent and Total
* FTSEurofirst 300 index edges up by 0.1 pct
* H&M slides after profit warning
By Sudip Kar-Gupta
LONDON, March 27 (Reuters) - European equities edged higher on Thursday, lifted by a rise in telecoms equipment maker Alcatel and oil group Total which were both boosted by new Chinese deals.
The pan-European FTSEurofirst 300 index, which rose 16 percent in 2013 and hit a 5-1/2 year high in January, was up by 0.1 percent at 1,320.92 points in mid-session trading.
The euro zone’s blue-chip Euro STOXX 50 index also inched up by 0.1 percent to 3,132.14 points.
Alcatel Lucent surged 5.6 percent, making the stock the best performer in percentage terms on the FTSEurofirst index, after it won a one-year contract worth up to 750 million euros ($1 billion) with China Mobile.
French group Total also rose 0.6 percent to hit a new high for 2014 after it won a Chinese deal, part of a series struck by leading French companies during a visit to Paris by Chinese President Xi Jinping.
Together, Total and Alcatel added the most points to the FTSEurofirst 300.
“I‘m quite bullish on European equities. We should have good top-line growth coming through for companies,” said Caroline Vincent, European equities fund manager at Cavendish Asset Management, whose portfolio includes Total shares.
According to data from Thomson Reuters StarMine, the pan-European STOXX 600 index is expected to deliver 9.8 percent earning growth, on average, over the next 12 months.
However, a profit warning on Thursday from Swedish fashion retailer Hennes & Mauritz (H&M) - which sent H&M shares down 4.6 percent - highlighted the lingering risk that not all companies would meet market expectations.
“This was not what we had hoped for,” said Societe Generale analyst Anne Critchlow, commenting on H&M’s results.
“It seems to be a combination of the gross margin being a little bit weaker than we expected, down 30 basis points - we were looking for flat - and the company had previously guided that mark-downs would be basically in line year-on-year, and in the end it seems that they were slightly higher,” she added.
Some traders note risks that the broader European equity rally over the past 1-1/2 years could stall on worries about a possible economic slowdown in China and tensions between Western powers and Russia over Ukraine.
The FTSEurofirst 300 has made little headway since hitting its 5-1/2-year peak of 1,353.47 points in late January, and has experienced sharp swings up and down over the last two months.
Fabrizio Quirighetti, economist and fund manager at Swiss bank SYZ, said continuing uncertainty over the economic and political outlook could create near-term volatility.
However, he expected stock markets to rise in the long term, helped by an ongoing economic recovery in Europe.
“Even if there is a certain caution surrounding financial markets at present, equities should continue to be supported by the positive outlook for developed economies,” he said.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today’s European research round-up
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