* FTSEurofirst 300 up 0.2 pct, Euro STOXX 50 up 0.2 pct * Euro zone exits recession, Germany, France beat GDP forecasts * ESTOXX 50 up nearly twice as much as S&P500 in past seven weeks * France's CAC 40 hits two-year high By Blaise Robinson PARIS, Aug 14 (Reuters) - European stocks edged higher around midday on Wednesday as data showing the euro zone emerged from recession in the second quarter kept a seven-week rally alive. Gains were capped by shares in Rio Tinto, AstraZeneca and Royal Dutch Shell losing their dividend entitlement. The euro zone growth spurt was led by the German and French economies, which both performed better than expected. At 1020 GMT, the FTSEurofirst 300 index of top European shares was up 0.2 percent at 1,239.63 points, gaining ground for the fifth session in a row and extending its gains since late June to 12 percent. France's blue-chip CAC 40 index hit a two-year high. Switzerland's biggest life insurer Swiss Life rose 2.5 percent after net profit jumped. German steelmaker ThyssenKrupp fell 1.5 percent after saying its finances weakened in the latest quarter. STILL PLAYING CATCH-UP? "There are signs of improvement in Europe while the region's equities remain cheap no matter which valuation metric you use, which is not justified anymore," said Jeanne Asseraf-Bitton, head of global cross asset research at Lyxor Asset Management, which has $94 billion euros under management. "The 'great rotation' out of fixed income and into stocks is well under way in the United States, but is just starting in Europe, and there's good potential for a catch-up rally." The euro zone's blue-chip Euro STOXX 50 index was up 0.2 percent at 2,845.96 points. The index has surged 14 percent since late June, outpacing Wall Street's S&P 500 which is up 8.6 percent over the same period, and is now just a few points below a peak hit in May, above which the index would reach 2011 levels. Tracy Knudsen, senior vice-president at technical analysis firm Lowry Research, said there looked to be room for more gains. "There is a lack of evidence suggesting it has reached an important top. The probabilities appear to favour an eventual upside breakout above the May highs," she said, adding that a pull-back in the short term would be a good buying opportunity. Around Europe, France's CAC 40 was up 0.4 percent, while Germany's DAX index was up 0.2 percent and UK's FTSE 100 index was flat, with profit-taking in the mining sector. The STOXX Europe 600 basic resources sector index - which has jumped more than 10 percent in the past week following reassuring data from China - was down 0.4 percent.
