* France's CAC 40 seen reversing first-half losses
* Stocks still facing headwinds
By Blaise Robinson
PARIS, June 24 (Reuters) - Strong company profits should eclipse euro zone sovereign debt worries to send France's CAC 40 around 1.6 percent higher before the end of 2010, a Reuters poll found, reversing losses suffered in the first half.
The CAC 40 was seen at 4,000 points by end-2010, up from 3,939 at the end of 2009 and 9.8 percent higher from Wednesday's close at 3,642, according to the median forecast of around 28 analysts and fund managers.
That was down from the 4,200 level forecast in the March poll. The latest poll also saw the CAC 40 at 4,200 points by mid-2011, up 15 percent from Wednesday's close.
France's blue-chip index, in which influential stocks include multinationals such as Danone, Total and LVMH, is down 7.48 percent so far this year, hit by concerns the euro zone debt crisis could derail the region's economic recovery.
"Companies' balance sheets are very healthy and we should normally be heading for even stronger gains on the market, but it's a fact that economic growth will be sluggish as countries struggle to deal with their debt," said Christian Jimenez, fund manager and president of Diamant Bleu.
He sees the CAC 40 at 4,000 points at the end of the year, and at 4,200 in mid-2011.
Following a mixed first quarter, the CAC 40 started to sink in mid-April, hurt by fears that Greece's debt woes could spread to other countries such as Spain and Portugal, sending the euro currency to a four-year low against the dollar.
Paris's benchmark index plummeted nearly 20 percent during the spring sell-off that hit stocks around the world, but the index managed to bounce back over the past two weeks, recouping some of the losses as debt worries moved to the back burner and investors scooped up battered shares, whose valuation ratios had fallen to levels not seen in nearly a year.
The recent fall in the euro is also seen by analysts and fund managers as a balm for French companies, especially the ones with a big chunk of their revenues coming from abroad.
But a number of analysts warned that the market still faces major headwinds.
"With all the fiscal austerity measures that will weigh on growth in the euro zone, we expect negative surprises on the earnings front and profit forecasts for 2011 will be trimmed, which in turn will prompt more losses on the stock market," said Philippe-Henri Burlisson, core management director of Groupama Asset Management.
Domestic-orientated companies also have a sword of Damocles over their heads, Burlisson said, as the government could start raising corporate tax rates to plug holes in its budget.
"These domestic-oriented sectors will face increasing fiscal pressure," said Burlisson, who sees the CAC 40 at 3,400 points at the end of the year, and at 3,500 points at mid-2011. (Polling by Blaise Robinson, Florent Le Quintrec, Juliette Rouillon in Paris and Bangalore Polling Unit; Editing by Jon Loades-Carter)