* FTSEurofirst 300 index up 0.2 percent
* Libya uncertainty intensifies after U.S. jet crash
* Insurers gain after sell-off last week
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By Harpreet Bhal
LONDON, March 22 (Reuters) - European shares were higher at midday on Tuesday in a continuation of a rebound from last week's hefty falls, with gains limited by uncertainty over the situation in Libya.
The pan-European FTSEurofirst 300 index of top shares was up 0.2 percent at 1,109.12 points by 1210 GMT, below a high at 1,114.04 after fresh jitters were triggered when U.S. military said a fighter jet had crashed in Libya overnight.
The insurance sector, which had been heavily sold off after the Japan crisis, added to gains from Monday's session to be among the top gainers. The STOXX Europe 600 Insurance rose 0.5 percent, with Prudential up 1 percent on a bullish note from UBS.
Analysts said the equity market was unlikely to make fresh highs in the medium term as uncertainty over the outcome of military intervention in Libya and fears the nuclear crisis in Japan had not been fully resolved would keep investors cautious.
"We think that equity markets will move sideways for the next weeks to come. There are still many factors which on balance are worsening the environment for equities (and) the medium term-impact is still very uncertain," said Tammo Greetfeld, equity strategist at UniCredit.
The market pared gains after a U.S. military spokesman said a U.S. Air Force F-15E fighter jet crashed, adding the incident unlikely to have been caused by hostile fire.
"There are sceptics out there thinking it may well have been shot down and since then people are sitting on the fence waiting to see if there's further news," a London-based trader said.
Uncertainty surrounding geopolitical events have knocked the equity market in recent weeks, as investors worry that high oil prices arising from the unrest in the oil-rich Middle East and North Africa region and the economic impact of Japan's earthquake could derail fragile recovery in the global economy.
Individual companies are feeling the pinch, with German retailer Metro falling 3.3 percent after it said risks to economic recovery had risen after the earthquake in Japan and unrest in north Africa.
Rio Tinto the world's No.2 iron ore miner said disruptions to supplies following Japan's earthquake posed a threat to its expansion plans. The miner shed 1.2 percent, against a 0.4 percent drop on the STOXX Europe 600 basic resources index. (Editing by Dan Lalor)