* FTSEurofirst 300 index 0.3 percent higher
* Construction stocks gain on recovery hopes
* C&W Worldwide rises on bid talk - traders
* For up-to-the minute market news, click on By Joanne Frearson
LONDON, Feb 4 (Reuters) - European shares were higher on Friday afternoon on optimism the global recovery was intact as investors hoped for a strong U.S. non-farm payroll reading, with construction stocks among the top performers.
By 1240 GMT, the pan-European FTSEurofirst 300 index of top shares was 0.3 percent higher at 1,166.01. The market ended flat on Thursday after early weakness.
"The upside is just a momentum trade carrying on from yesterday," Matt Brown, trader at Catalyst Markets said.
"Investors are waiting for non-farm payrolls, we are trading at the top end of the ranges and if the number is weaker than forecast we could see a sell-off."
Investors were expecting a strong U.S. non-farm payrolls reading after a drop in U.S. weekly jobless claims. The data, due at 1330 GMT, was forecast to show the economy created 145,000 new jobs last month, after a 103,000 rise in December.
Thursday's comment from U.S. Federal Reserve chairman Ben Bernanke, which made clear the recovery would be supported by the Fed, also encouraged investors that monetary policy will remain accommodative.
Construction stocks featured among the top performers on the recovery hopes. Finish builder YIT rose 7.7 percent after it forecast a jump in 2011 profit, buoyed by demand for new flats in Fnland and Russia. Construction peers Saint-Gobain, Holcim and HeidelbergCement were 2.2-3.0 percent higher.
C&W WORLDWIDE JUMPS
Cable & Wireless Worldwide gained 6.1 percent, with traders citing talk of bid interest in the British company.
"We are hearing further take-over speculation ... AT&T have been in the frame before," a London-based trader said.
Cable & Wireless Worldwide declined to comment.
Actelion rose 4.1 percent after hedge fund shareholder Elliott Advisors called for the Swiss biotech to explore a possible sale, and for the chairman and chief executive to resign from the board.
Utility stocks were also in demand. A BofA Merrill Lynch rating upgrade boosted shares in British water companies Severn Trent and United Utilities, which gained 3.5 percent and 3.1 percent respectively.
Enel rose 2.5 percent after Italy's biggest utility beat a key debt target thanks to cash generation and asset sales including a 30 percent stake in renewable unit Enel Green Power .
On the downside, LVMH fell 2.7 percent after the world's biggest luxury group gave no forecast for the current year, while profit came in line with forecasts.
Technical indicators showed the market could be close to a pull back, with the relative strength index (RSI) on the euro zone's blue chip Euro STOXX 50 index reaching 63.6. A reading of 70 or above is considered overbought territory.
The Euro STOXX 50 index gained 0.4 percent. Across Europe, the FTSE 100 index was 0.4 percent higher, Germany's DAX gained 0.3 percent and France's CAC 40 rose 0.4 percent. (Reporting by Joanne Frearson; Editing by Dan Lalor)