* FTSEurofirst 300 up 0.4 percent
* BP, ARM rise on Q4 profits beats
* KPN slides after rights issue announcement
By Tricia Wright
LONDON, Feb 5 (Reuters) - European shares rose on Tuesday, recovering after the previous session's sharp sell-off as investors digested a raft of earnings reports, with ARM and BP both gaining strongly.
British chip designer ARM was among the top FTSEurofirst 300 risers, climbing 3.7 percent after it unveiled a better-than-expected rise in pretax profit in the fourth quarter, boosted by rising sales of smartphones and tablets using the firm's technology.
"Their sales were well ahead of consensus ... but I will not be chasing the stock at these levels. I'll look to buy them on the dip," Hartmann Capital trader Basil Petrides said.
BP advanced 1.9 percent, adding most points to the index after its fourth-quarter profits exceeded analysts' expectations, helped by a record performance from its refining division.
Sector peer BG Group, however, was a major drag, off 1.7 percent, as it warned it would miss a medium-term production target.
The FTSEurofirst 300 was up 0.4 percent at 1,155.98 by 0922 GMT, having dropped 1.5 percent on Monday as mounting political uncertainty in the euro zone's big debtor countries prompted investors to lock in profits on indexes trading close to multi-year highs.
Traders and strategists said the previous session's weakness could be viewed as a buying opportunity.
"I think a lot of people recognise there is a lot of value in the markets," Toby Campbell-Gray, head of trading at Tavira Securities, said.
Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said: "Our working hypothesis remains that after the correction the trends in place before will continue as the two main drivers are still there, namely central banks continuing to inject liquidity and more and more proof of an economic recovery somewhere between Q1 and Q2."
KPN topped the FTSEurofirst 300 fallers' list, off 22 percent after the Dutch telecoms group announced plans to cut its debt with a 4 billion euro ($5.4 billion) cash call to shareholders, as it posted a fourth-quarter net loss.
Trading volume in KPN was robust, at 240 percent of its 90-day daily average, against the FTSEurofirst 300 on around 30 percent of its average.
Tele2 was another significant faller, down 9.7 percent, after warning of slower growth in Sweden and Russia this year after the Nordic and emerging markets telecoms group reported lower than expected fourth-quarter earnings.
Trading volume in Tele2 stood at 332 percent of its 90-day daily average.
The fourth-quarter earnings season in Europe has got off to a mixed start. Of the 19 percent of companies to have reported, 65 percent have beaten or met expectations, but with a quarterly year-on-year contraction of 12.3 percent, according to Thomson Reuters Starmine data.