* FTSEurofirst 300 up 0.4 percent
* Industrial stocks gain; Schneider rises
* Banks fall as regulators haggle
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By Joanne Frearson
LONDON, March 18 (Reuters) - European shares, led by industrials, rose on Friday after the Group of Seven nations helped calm market nerves over the Japanese earthquake-tsunami disaster by intervening to restrain a soaring yen. Uncertainty still surrounded the Japanese nuclear power plant crisis and tensions remained high in the Middle East and north Africa after the United Nations authorised military strikes on Libya.
The pan-European FTSEurofirst 300 index of top shares was up 0.4 percent at 1,091.00 points by 0912 GMT, having closed up 1.8 percent on Thursday. The industrial sector featured among the best performers, with the STOXX Europe 600 Industrial Goods & Services rising 1.4 percent.
"The G7 intervention is calming the markets, but we still need a few days of consolidation to think we are over the worst of it," Giles Watts, head of equities at City Index, said.
The yen fell after central banks around the world agreed to jointly intervene in the currency market.
"It is just helping sentiment and stocks sensitive to risk will push on. But, optimism is going to be guarded as there are no firm resolutions surrounding the Japanese nuclear crisis and the Middle East and anything can happen on the weekend," Watts said.
Buyers were in Schneider which gained 3.7 percent as analysts said the company would be helped by a push towards being energy efficient following the Japan nuclear disaster.
BANKS FALL
Investors were also watching banks after the Europe Union's banking watchdog said a stricter capital definition had still not been agreed for the second round of stress tests, with traders concerned about which lenders had sufficient capital to withstand economic shocks.
The STOXX Europe 600 Banks index fell 0.3 percent, with Banco Santander, BBVA and Barclays down 0.8-1.1 percent.
However, following a sell-off early in the week, investor appetite for riskier assets had improved, with the VDAX-NEW volatility index continuing its drop from the previous session, down 9 percent after a recent nine-month high.
The higher the volatility index, based on sell and buy options on Frankfurt's top-30 stocks, the lower investor appetite for risky assets such as stocks.
Looking at valuations, analysts said stocks were good value.
"On 12-month forward earnings both European and UK equities are inexpensive, both trading over 25 percent below average. Using price to book, which avoids the short term risk to the earnings forecast,equities are around averagely valued," Citigroup said.
Equity valuations on Thomson Reuters Datastream showed the STOXX Europe 600 carrying a forward price-to-earnings ratio of 10.8, below a 10-year average of 13.6, Thomson Reuters Datastream showed.
Across Europe, the FTSE 100 index was up 0.4 percent, Germany's DAX was 0.5 percent higher and France's CAC 40 was up 0.7 percent. (Reporting by Joanne Frearson; Editing by Dan Lalor)