* FTSEurofirst 300 index rises 1.1 percent
* Indexes rebound after hitting "oversold" levels
By Atul Prakash
LONDON, Feb 6 (Reuters) - European equities bounced backfrom oversold technical levels on Thursday after a sharptwo-week drop, with reassuring earnings from major companiesAlcatel-Lucent and AkzoNobel boosting their shares.
Charts the euro zone's blue-chip Euro STOXX 50 index rebounded after its 9-day relative strength index(RSI) slipped to 26 in the previous session. A level below 30 isconsidered "oversold" and often attracts buyers.
The index was up 1.2 percent at 2,998.21 points by 1132 GMT,while the pan-European FTSEurofirst 300 index rose 1.1 percentto 1,285.91 points after its RSI fell to 27 on Wednesday.
"It's very likely to see a short-term stabilisation in themarket as we have seen an 'oversold' situation and the EuroSTOXX 50 index is nearing some important support zones,"Thorsten Grisse, technical strategist at Commerzbank (Xetra: CBK100 - news) , said.
"It does not mean that the recent consolidation process isover, but from a medium-term perspective, we are still in a finebull market."
Buying was supported by data from the fourth-quarterearnings season, which has gathered pace in Europe.
Alcatel-Lucent surged 11.5 percent in heavyvolumes after the telecom gear maker posted forecast-beatinggross margins and operating profit, prompting hedge fund shortsellers to unwind negative bets on the stock.
According to data from Markit, about 9 percent of Alcatel'sshares are out on loan, up from 6.3 percent in mid-December,making it the most shorted stock on France's CAC 40.Short selling involves selling borrowed shares in theexpectation of being able to buy them back more cheaply later.
AkzoNobel rose 7.3 percent, the second-biggestgainer on the FTSEurofirst 300 as the Dutch paints andchemicals firm reported higher-than-expected earnings and hopedto meet its 2015 targets.
Trading volumes of Alcatel-Lucent and AkzoNobel were 185 percent and 202 percent of their 90-day daily average, against44 percent for the FTSEurofirst 300.
"The earnings season has been mixed. Possibly we will someeasing of the downward revisions to 2014 earnings estimates, butwe have to be aware that a double-digit earnings growth thisyear is a little bit ambitious," said Gerhard Schwarz, head ofequity strategy at Baader Bank (Xetra: BWB.DE - news) .
"We have seen a hefty decline (in European shares), butoverall we should not be too much worried because thefundamentals of the market have not changed much."
Investors awaited a European Central Bank meeting for themarket's near-term direction.
Following a recent surprise fall in inflation, pressure hasrisen on the ECB to ward off the risk of the euro zone slippinginto deflation. The Bank of England kept rates unchanged at itspolicy meeting.
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