* FTSEurofirst 300 up 0.6 percent
* Food and beverages stocks among top gainers
* Investors await Fed policy setting meeting on Tuesday
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By Atul Prakash
LONDON, Sept 20 (Reuters) - European equities bounced back on Monday, with a jump in Suedzucker on a rise in revenue propelling food and beverage shares into the top gainers.
At 1127 GMT, the FTSEurofirst 300 index of top European shares was 0.6 percent higher at 1,079.20 points, after retreating on Friday when figures showed U.S. consumer sentiment dropped to its lowest level in more than a year.
Food and beverages shares were among the top gainers, with the sector index rising 1.2 percent. Suedzucker, Europe's largest sugar maker, rose 3.4 percent after it posted a 5 percent rise in first-half revenue.
Danish food ingredients and enzymes maker Danisco was up 1.9 percent ahead of first-quarter results due on Tuesday. AB Inbev , Associated British Foods and Danone rose 1.2 to 1.5 percent.
Analysts said the market overall looked set to remain choppy.
"Fundamentally, European shares are not expensive so that's giving some support. On the other hand, you are not in a phase of sustained growth yet either. The market is going largely sideways and it could very well continue for some time like this," said Luc Van Hecka, chief economist at KBC Securities.
Investors stayed cautious ahead of the U.S. Federal Reserve's policy-setting meeting on Tuesday. Policymakers need to decide if and when to launch further large-scale asset purchases to support the sluggish recovery.
"The Fed will try to reassure the market that there will be sufficient liquidity. If you need to stimulate markets in the current environment, you can do a lot of things, but you cannot afford to cause a real deflationary cycle on assets again," Hecka said.
The central bank acknowledged in August that the U.S. recovery had lost momentum and Chairman Ben Bernanke said the Fed would renew efforts to stimulate growth if the outlook soured appreciably.
"There is plenty of pressure on the Fed to put forward what they are going to do to stop the U.S. going into a double dip recession. It will be the main focus of the week and the market could go either way," IG Index sales trader Will Hedden said.
TECHNICAL SUPPORT
Technical analysts said the FTSEurofirst 300 index's reversal last week coincided with a run up to levels that had left the index looking relatively overbought. The index fell 0.8 percent last week following two weeks of gains.
"What we need to watch out for is that it remains above the medium-term downtrend, which it finally penetrated the week before and which is now indicating the possibility of support at around 1,061," said Bill McNamara, analyst at Charles Stanley.
Banks were generally higher. Barclays, Lloyds, Royal Bank of Scotland and Credit Agricole rose 0.8 to 1.4 percent. But Greek banks fell 1.9 percent. A source at the central bank told Reuters Greece will postpone stress testing the country's banks for later in the autumn. Alpha Bank and EFG Eurobank and National Bank of Greece fell 1.1 to 3.3 percent.
As part of the emergency 110 billion euro funding package Greece clinched with the International Monetary Fund (IMF) and its euro zone peers in May, it agreed on stronger supervision of the banking system, including quarterly stress tests.
Mining stocks were supported by stronger metals prices, with gold hitting a record high on hopes that U.S. interest rates will stay low. Copper, aluminium and Nickel rose 0.4 to 1.4 percent.
The STOXX Europe 600 basic resources index rose 0.5 percent. BHP Billiton, Anglo American, Antofagasta, Rio Tinto, Xstrata and Eurasian Natural Resources were up 1.1 to 1.7 percent.
France's Safran was up 4 percent. The company unveiled a $1.1 billion deal to buy L-1 Identity Solutions and its core biometric identity business in a move that will also involve BAE Systems extending its reach in the United States. (Additional reporting by Joanne Frearson; Editing by David Holmes)