* FTSEurofirst 300 up 0.2 pct, Euro STOXX 50 down 0.7 pct * Investors cautious ahead of ECB, Spain debt auction * European shares still cheap relative to book value By Blaise Robinson PARIS, Feb 6 European stocks were mixed at midday on Wednesday as the previous session's tentative recovery lost steam, with euro zone banks sliding on renewed concerns over the health of the region's economy. Intesa Sanpaolo dropped 2.7 percent, UniCredit was down 2.4 percent, Commerzbank down 1.4 percent and Credit Agricole down 1.7 percent. At 1200 GMT, the FTSEurofirst 300 index of top European shares was up 0.2 percent at 1,156.78 points, after gaining as much as 0.6 percent earlier in the session, while the euro zone's blue chip Euro STOXX 50 index was down 0.6 percent at 2,636.26 points. "The rebound is quite lame. It's better not to buy at the moment, at least until indexes go back to this week's highs or even last week's highs," Saxo Banque senior sales trader Alexandre Baradez said. "It's better to wait for a clear direction, which might not come before tomorrow's ECB rate decision and press conference as well as Spain's bond auction, whose results will be closely watched as yields have been on the rise again." European stocks suffered a sell-off on Monday sparked by worries over a corruption scandal in Spain and polls showing Italy's former prime minister Silvio Berlusconi regaining ground before elections this month. Both Madrid and Milan bourses were down on Wednesday, with the IBEX losing 0.5 percent and the FTSE MIB falling 0.7 percent. So far this year, the IBEX is down 1.4 percent, the laggard among Europe's main benchmark indexes. Italy's MIB is up 2 percent in 2013, while the FTSEurofirst 300 is up 2 percent and the Euro STOXX 50 is down 0.1 percent. Debt-stricken Spain, which has seen its bond yields rising since mid-January, is set to issue up to 4.5 billion euros in bonds on Thursday. "MARKET WILL RISE BY PHASES" Despite the recent return of worries over the ability of Spain and Italy to cut their deficit and kick-start their economies, Cholet Dupont strategist Vincent Guenzi said the overall trend for European stocks was still positive as liquidity from central banks remained abundant and strong investment inflows into equities would continue to be supportive. "We recommend taking advantage of these pull-backs to boost exposure to equities in portfolios. The equity market will continue to rise by phases, with a growing appetite for the asset class from investors ... The correction phases should be less violent than in 2011 and 2012," he said. Cholet Dupont is "overweight" European equities, which are seen as lagging U.S. stocks. The broad STOXX Europe 600 index trades at 12 times 12-month forward earnings, its highest price-to-earnings ratio (P/E) in nearly three years, although still below a 10-year average of 12.2, according to Thomson Reuters Datastream. However, European stocks look cheap when compared to companies' book value. The average price-to-book ratio of the STOXX 600 is 1.6, well below a 10-year average of 2.1. By comparison, Wall Street's S&P 500 trades at a P/E ratio of 13.4 and a P/B ratio of 2.2. Around Europe on Wednesday, UK's FTSE 100 index was up 0.5 percent, Germany's DAX index down 0.2 percent, and France's CAC 40 down 0.6 percent. Among the top gainers across Europe, shares in the world's largest steelmaker ArcelorMittal rallied 3.1 percent, bouncing back from a recent 10 percent slide after the company forecast improved demand and earnings in 2013. The upbeat outlook boosted shares in the sector, with German steelmaker Salzgitter up 2.6 percent and Norwegian aluminium maker Norsk Hydro up 1.1 percent. Dutch telecom group KPN fell 3.8 percent, after Tuesday's 16 percent plunge triggered by the company's plan to launch a rights issue to reduce its debt load and protect its credit rating.