* FTSEurofirst 300 up 1 pct; rebounds from Monday's drop
* HSBC rises on Goldman's upbeat note on U.S. unit
* Rio Tinto up 3.5 pct after agrees to sell packaging unit
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By Blaise Robinson
PARIS, Aug 18 (Reuters) - European shares were up 1 percent around midday on Tuesday, recouping a big portion of the previous session's losses, helped by forecast-beating German sentiment data and ahead of key U.S. housing figures.
Banks were among the top gainers, with UniCredit up 2.6 percent, UBS up 1.8 percent and Deutsche Bank up 1.6 percent.
HSBC rose 2.5 percent after Goldman Sachs analysts upgraded their rating on the stock to "buy" from "neutral", saying the lender's troubled U.S. unit would stop being a major drag on earnings earlier than expected.
Swedbank jumped 8 percent a day after the bank surprised markets with a $2.1 billion rights issue to boost its balance sheet hit by bad debts in the Baltics, which triggered rating upgrades from a number of brokers.
At 1040 GMT, the FTSEurofirst 300 index of top European shares was up 1 percent at 930.72 points.
The benchmark index, which has soared 44 percent since reaching a floor in March, tumbled 2 percent on Monday, falling along with stock markets around the world on concerns the market had gone ahead of the global economic recovery.
"After such a rally, it's easy to be reluctant about further potential on the upside on equity markets," said Arthur van Slooten, European equity strategist at Societe Generale.
"But the global picture still remain in place. There is no end in sight for quantitative easing, and meanwhile, a number of economies are already coming out with positive growth figures."
The VDAX-NEW volatility index, a measure of investor risk appetite or aversion, was down 3.3 percent, after jumping 14 percent in the previous session as investors' recent strong appetite for risky assets sharply dropped in the wake of poor U.S. macroeconomic data.
"Despite yesterday's blip, volatility remains low, and there is still good arguments for continued net inflows into equity funds," van Slooten said.
"There has been equity buying, but there's also an enormous amount of cash still waiting outside. A lot of investors haven't stepped back in equities yet."
Miners gained ground along with metal prices, with Rio Tinto up 3.5 percent after agreeing to sell its Alcan packaging unit for about $2 billion to Australia's Amcor, easing its debt burden after an ill-timed acquisition two years ago.
Anglo American added 2.1 percent, BHP Billiton rose 2 percent and Xstrata gained 4.7 percent.
The market got a boost from the ZEW research institute's economic sentiment index for Germany, which was better than expected.
EYES ON U.S. HOUSING
The key survey rose to 56.1 in August from 39.5 in July, taking the indicator to its highest level since April 2006, sending the euro rising against the dollar and the yen while euro zone government bond futures retreated.
Investors were bracing for data on U.S. housing starts and building permits for July, due at 1230 GMT.
The mean median forecast of 62 economists polled by Reuters show housing starts expected up at a seasonally adjusted annual rate of 600,000 units last month, after rising to 582,000 units in June.
"U.S. housing starts will hopefully be showing positive figures. The market has got itself into a position now that it is expecting good news and anything that isn't good is likely to be greeted with severe concerns," said Justin Urquhart Stewart, director at Seven Investment Management, in London.
On the downside, Danish biotech company Genmab slumped 27 percent after the company said it would report a bigger loss in 2009 than initially expected following its failure to get a milestone payment in the wake of disappointing drug trial results.
Across Europe, the FTSE 100 index was up 0.8 percent, while Germany's DAX and France's CAC 40 both gained 0.6 percent.
On the year, the FTSE 100 is up 5.6 percent, the DAX up 8.7 percent and the CAC up 6.9 percent. The FTSEurofirst 300, which is up 12 percent on the year, is still down 43 percent from a multi-year peak reached in mid-2007. (Additional reporting by Joanne Frearson in London; editing by Karen Foster)