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* FTSEurofirst 300 up 0.9 percent
* Italy bond auction assuages investor fears
* U.S. Fed defends asset buying plans
* Bouygues, EADS, WEIR rally on earnings hopes
* Petrofac, Jeronimo Martins fall on profit misses
By David Brett
LONDON, Feb 27 (Reuters) - European shares found firmer footing on Wednesday, having tumbled lower in the previous session after the inconclusive Italian election, as investors used the opportunity to buy back in on beaten down assets.
The FTSEurofirst 300 closed up 10.33 points, or 0.9 percent at 1,160.58, led by strength in benchmark indexes in Italy and Spain, which had fallen 4.9 and 3.2 percent, respectively, on Tuesday after the election stalemate renewed concerns about the euro zone's future.
"There's a lot of money ready to go in on the dips and people do tend to invest by looking in the rear-view mirror and there's nothing that increases confidence more than a market that has performed well," Peter Clark, chief investment officer at Igenious Asset Management, said.
The euro zone blue chip index and the broader STOXX 600 remain up around 9 percent and 7 percent, respectively, since November as central banks stepped in with unprecedented support the global financial system.
A well-bid Italian bond auction, the first test of investor demand for the country's debt after the weekend elections, helped stocks recover on Wednesday.
As did the U.S. Federal Reserve's defence of its bond-buying plans - seen as broadly supportive of equities over other asset classes - and data showing businesses were becoming more confident in the durability of the economic recovery.
France's CAC 40 index was among the top performing euro zone country indexes with a 1.9 percent rise, aided by robust results newsflow from Bouygues and EADS .
Bouygues jumped 13.2 percent after the construction-to-media conglomerate unveiled a 3 percent rise in full-year sales, while maintaining its dividend.
Airbus parent EADS advanced 6.5 percent as it predicted higher profit this year on the heels of stronger than expected 2012 earnings and a clampdown on costs.
British engineer Weir jumped 7.3 percent after posted a forecast-beating 12 percent rise in profits in 2012.
British oil services firm Petrofac and Portuguese retailer Jeronimo Martins, however, fell 6.3 percent and 6.1 percent respectively after both missed profit forecasts, while Kazakh miner ENRC shed 2.6 percent after warning of significant asset writedowns.
BUY THE DIPS
On the whole, European earnings have underwhelmed in the current quarter. Companies have so far reported on average a 13.6 percent contraction in quarterly earnings year-on-year, which has helped contribute to the euro zone blue chip index and the broader STOXX 600 falling around 6 percent and 2 percent since the end of January.
The falls, however, have allowed earnings forecasts to catch up with the recent moves in valuation - price-to-earnings ratio are at post credit-crisis highs - which could benefit equities in the longer-term.
"The recent market consolidation offers a compelling entry point into global equity markets ... (and) we see scope for (European) earnings to positively surprise in 2013/14 and for the multiple to expand from 12.0 times to 12.5 times," Paul Reynolds, analyst at Deutsche Bank, said, adding Deutsche remained bullish on the Stoxx 600.
Telecoms rose 1.7 percent, led by heavyweight mobile telecoms firm Vodafone, which climbed 2 percent boosted by a media report that it has suspended plans to approach Kabel Deutschland Holding AG about a takeover bid.
Spanish firm Telefonica added 3.1 percent after its Czech unit announced plans to restart a share buyback programme.