* FTSEurofirst 300 index up 0.5 percent
* Upbeat outlook for U.S. economy helps sentiment
* Luxottica rises; sees strong demand
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By Harpreet Bhal
LONDON, March 1 (Reuters) - European shares rose on Tuesday, starting the month on a stronger footing, with sentiment boosted by growing optimism over the outlook for the U.S. economy as investors snapped-up stocks beaten down in the recent sell-off.
By 0959 GMT, the pan-European FTSEurofirst 300 index of top shares was up 0.5 percent at 1,174.49 points, after closing 0.8 percent higher on Monday.
Sentiment towards equities was helped by bullish comments from billionaire investor Warren Buffett who said that he saw the need for "major acquisitions", a sign stocks may be cheap, and gave aggressive earnings forecasts for his Berkshire Hathaway collection of businesses.
The bullish comments, along with an upbeat assessment of the economy by U.S. Federal Reserve official James Bullard, helped U.S. stocks post gains on Monday.
"It's very important that the U.S. economy is now showing signs of strength ... and forecasts for this year's GDP are starting to exceed 4 percent. This is certainly good news for the world economy," said Heino Ruland, strategist at Ruland Research in Frankfurt.
Automakers rose, with a positive buzz surrounding the sector as carmakers gathered this week for the Geneva auto show.
Volkswagen rose 1.8 percent after it said it was acquiring a 8.18 percent stake in carbon products manufacturer SGL Carbon, which gained 6.6 percent.
Within the sector, BMW, Daimler and Peugeot added 2 to 3.2 percent.
Individual gainers included Luxottica, which rose 3.6 percent after the world's biggest premium eyewear said late on Monday that it expected demand from the U.S. and emerging markets to help profit growth to exceed sales this year.
Heavyweight mining shares were also higher, with the STOXX Europe 600 basic resources index up 1.3 percent, rebounding from two straight weeks of falls.
CONSOLIDATION TRIGGER
The FTSEurofirst index was on track to rise for the third straight session, rebounding from a sharp sell-off on concerns over soaring energy prices as political unrest swept across parts of oil producing region of the Middle East and North Africa.
"The consolidation was expected because markets were overbought and we were now oversold for a short period of time and this formed the basis for the bull market trend to resume," said Ruland.
On the economic front, the euro zone's manufacturing sector expanded at its fastest pace in nearly 10 years in February, the Markit Eurozone Manufacturing Purchasing Managers' Index (PMI) showed, but a rise in prices at their quickest rate in at least 14 years is likely to cause a headache for policymakers.
A separate piece of data showed the EU Commission forecasts 2011 euro zone gross domestic product growth at 1.6 percent, against 1.5 percent previously.
Investors will watch a testimony by Federal Reserve Chairman Ben Bernanke at 1500 GMT, where he is expected to remain cautious about the economy signalling the U.S. central bank is unlikely to cut short its $600 billion stimulus package.
"Inflation seems to be less of a problem in the U.S. and Bernanke is focused on the two main factors for the U.S. economy -- unemployment and housing -- and there is very little room to manoeuvre until we start to see any significant improvements there," a London-based trader said.
On the downside, Kingfisher was among the biggest fallers in Europe, down 3 percent after broker Societe Generale downgraded its rating for the British home improvement retailer to "sell" from "hold", saying its B&Q business faces more severe consumer headwinds. (Reporting by Harpreet Bhal; Editing by Hans Peters)