* FTSEurofirst 300 index ends 1.1 percent higher
* Financials advance ahead of Federal Reserve's meeting
* E.ON's impressive results boost utility shares
By Atul Prakash
LONDON, Aug 12 (Reuters) - European shares ended higher on Wednesday after slipping in the past two days, with impressive results from E.ON boosting utilities and banks up ahead of Federal Reserve statements on the state of the U.S. economy.
The FTSEurofirst 300 index of top European shares was up 1.1 percent at 942.06 points. The index, which slumped 45 percent last year, is up 13 percent in 2009 and has surged 46 percent since March's lifetime low.
Germany's E.ON rose 5.4 percent after the world's largest utility said it saw signs that demand for energy was stabilising after a prolonged slump and tweaked its 2009 outlook higher after first-half profits beat forecasts.
"For the reminder of this year, this kind of profitability story is the main driver for people to revise next year's earnings forecasts higher and that's positive for the market," said Franz Wenzel, strategist at AXA Investment Managers.
"Equity markets could easily go higher by about 5 percent in the short term," he added.
The DJ STOXX European Utilities Index was among the top sectoral gainers, up 2.6 percent. GDF SUEZ, Centrica, RWE and Severn Trent advanced between 1 percent and 4.3 percent.
Financial stocks were also among significant gainers ahead of the outcome of the U.S. Federal Reserve's policy-setting committee meeting at 1815 GMT, which is expected to hold its benchmark overnight rate in a range of zero to 0.25 percent.
The DJ STOXX banking index was up 1.3 percent, while Barclays, Royal Bank of Scotland, BNP Paribas and Natixis rose between 2.1 and 5.4 percent.
"I don't think you are going to get anything negative out of the Fed today. What you want to see is a central bank that is not going to take any risks on the deflationary side and withdraw policy earlier," said Bernard McAlinden, a strategist at NCB Stockbrokers.
UBS AG gained 3.1 percent after news that the Swiss bank and the U.S. government have agreed to settle a long-running dispute over the disclosure of names of wealthy American bank clients suspected of tax evasion.
Britain's Lloyds was up 6.4 percent. The bank said it would sell the bulk of its Insight Investment unit to Bank of New York Mellon for 235 million pounds ($386 million) as part of a shake-up of its asset management units.
EUPHORIA
Investors digested a slew of economic news. The Bank of England said Britain's worst recession in decades would end early next year, but it would take time for the gross domestic product (GDP) to return to pre-crisis levels, pushing unemployment up from the current 13-year high.
"There is a kind of euphoria starting to build in. The markets are ignoring negative news and much more focusing on positive news," Wenzel said.
The U.S. trade deficit widened in June to $27 billion, as goods imports rose for the first time in 11 months, and euro zone industrial output fell in June against May, defying expectations of a small rise.
Commodity shares were in demand as crude and metals prices rose. Royal Dutch Shell, BG Group, Tullow Oil, Repsol, Total and StatoilHydro added 1.6 to 4.9 percent.
Among miners, BHP Billiton, Anglo American, Antofagasta and Xstrata rose 0.5-2.8 percent.
Volkswagen and Porsche were up 0.7 percent and 1.3 percent, respectively. They have broadly agreed on details for a deal to combine two of Europe's automakers, two VW supervisory board members told Reuters.
Among the losers, Nestle, the world's biggest food group, fell 4.4 percent as the company pared its full-year outlook after missing forecasts with first-half organic sales growth of 3.5 percent.
Across Europe, Britain's FTSE 100 index, Germany's DAX and France's CAC 40 were up 1-1.5 percent. (Additional reporting by Christoph Steitz in Frankfurt; editing by Karen Foster)