* FTSEurofirst 300 up 1.1 pct, at new 2-year high
* STOXX Europe 600 rises to highest since mid-2008
* Standard Chartered drives gains on bank stocks
* Equities boosted by gains in New York
* Central bank support propping up stock markets
By Sudip Kar-Gupta
LONDON, March 5 Gains in financial stocks helped to lift European equity markets to new peaks on Tuesday as monetary policy support from central banks continued to underpin investor sentiment.
The pan-European FTSEurofirst 300 index rose 1.1 percent to 1,181.49 points while the euro zone's blue-chip Euro STOXX 50 index advanced 1.4 percent to 2,657.49 points.
The FTSEurofirst 300 was at a fresh two-year high, while the STOXX Europe 600 index also rose 1.2 percent to reach its highest level since mid-2008.
Record profits from British-listed bank Standard Chartered boosted financial stocks, with Standard Chartered rising 4.1 percent and enabling the STOXX Europe 600 Bank index to go up by 1.8 percent.
Hartmann Capital trader Basil Petrides said Standard Chartered's figures looked "very strong" and recommended buying bank stocks at relatively cheap prices on days when equity markets fell.
"You've got to be a buyer of the banks on the dips," he said.
The tendency of investors to move in to buy stocks "on the dip" on days of sharp falls on European stock markets, such as in late February when Italy's election stalemate unnerved investors, has prevented any major decline on equities.
Most investors expect any stock market fall in March, which may be caused by problems with Italy, highlighting lingering worries over the euro zone's sovereign debt crisis, will be short-lived.
The consensus in that equity markets will rise gradually over the course of 2013, helped by plans by world central banks to continue with stimulus programmes.
"Every time there's a pullback, there's a wave of buyers which is pushing European indexes close to the top of their recent trading range," said Aurel BGC chartist Gerard Sagnier, whose firm has a "buy" recommendation on European equities.
LIMITED NEAR-TERM GAINS?
Berkeley Futures Associate Director Richard Griffiths said strong gains on U.S. stock markets were also supporting European equity markets, with the Dow Jones industrial average index within touching distance of all-time closing highs.
"The U.S. market is propping up the world and it seems determined to hit those new highs," he said.
However, Griffiths added clients were selling "call" options - which bet on a future market rise - on the German DAX and Euro STOXX to get some protection in case the equity market rally petered out in the near term, with worries over Italy's political deadlock weighing on investors.
Griffiths said clients were selling "call" options due to mature in 2-3 months on the DAX with a strike price of around 8,000 points, as well as selling "calls" on the Euro STOXX 50 with a strike price of 2,750 points.
This implies that many investors do not expect those two indexes to rise by more than 3 percent by April or May.
"Customers are happy to sell "calls" on the DAX and the Euro STOXX. It's difficult to see the market rallying hugely from here. Any moves up from here will be sluggish," he said.
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