FRANKFURT, Jan 26 (Reuters) - European shares were higher at midday, led by financials after updates from Barclays (BARC.L) and ING (ING.AS) triggered a recovery in the battered sector on Monday.
At 1200 GMT, the FTSEurofirst 300 .FTEU3 index of leading European shares was up 1.2 percent at 769.68 points after falling in 12 of the past 13 sessions.
Barclays rocketed 56 percent after saying it did not need to raise fresh funds, and had seen a good start to 2009 with high customer activity.
ING rose 22 percent after saying it would tap into 22 billion euros ($28.5 billion) of Dutch state loan guarantees for its troubled loan portfolio, and that its chief executive was stepping down.
"The news about Barclays was certainly better than expected and, to a certain extent, supports sentiment in the market," said Heinz-Gerd Sonnenschein, equity strategist at Postbank in Bonn, Germany.
"It is good that banks come clean with their situation and that is rewarded. However, a general all-clear for the market cannot be given," he said.
BNP Paribas (BNPP.PA) rose 13 percent after it forecast a fourth-quarter loss of around 1.4 billion euros. Societe Generale (SOGN.PA) and Lloyds (LLOY.L) were up 9.4 and 21.5 percent, respectively.
The DJ Stoxx banks index .SX7P has lost 17.2 percent so far this year as fears about banks' funding situation returned.
Governments have launched huge stimulus packages and created rescue funds for banks to help limit the impact of a recession that has gripped some of the world's biggest economies.
Dutch electronics giant Philips Electronics (PHG.AS) rose 5.2 percent after posting its first quarterly loss since 2003 but saying it would accelerate its restructuring programme.
Across Europe, Britain's FTSE .FTSE was up 1.2 percent, while Germany's DAX .GDAXI and France's CAC .FCHI both rose 1.1 percent
