* FTSEurofirst 300 up 0.4 percent, reverses early dip
* Index up for 10th day in a row, up 12.3 pct over 2 weeks
* Germany's Ifo, euro zone PMI data boost optimism
By Blaise Robinson
PARIS, July 24 (Reuters) - European stocks reversed early losses and rose on Friday, up for a tenth session in a row, as forecast-beating European macro data eclipsed poor results from Microsoft and gloomy comments from Ericsson.
Banks were among the biggest gainers, with BNP Paribas up 2 percent, Deutsche Bank up 1.8 percent and Royal Bank of Scotland up 2.8 percent.
At 0905 GMT, the FTSEurofirst 300 index of top European shares was up 0.4 percent at 911.77 points, after rising to as high as 915.34 points, its highest level since mid-November. The index has soared 12 percent over the past two weeks -- its longest winning run since December 2006.
Optimism about a burgeoning economic recovery and better-than-feared company profits has propelled the FTSEurofirst 300 up 41 percent from March's record low, and the index is now up 9.6 percent on the year, after plummeting 45 percent in 2008.
"The rally over the past two weeks has been very fast and the market is now dangerously overbought. We're due for a pause, which would be healthy if we want to keep the upside trend alive," said Alexandre Le Drogoff, technical analyst at Aurel BGC.
"But I'm still cautious on the longer term. We haven't seen yet a reversal of the downtrend started two years ago."
After an early dip, stocks turned positive when data showed Ifo's closely-watched German business climate index rose to 87.3 in July, higher than the Reuters consensus for a smaller rise to 86.5.
Euro zone provisional purchasing managers' surveys also showed the services and manufacturing sectors contracted much less sharply than expected in July but firms continued to cut jobs in a bid to reduce costs.
The gains in Europe on Friday followed a rally on Wall Street, where upbeat earnings and improving housing data helped the S&P 500 punch through a critical technical resistance level at 960, triggering a rally that lifted the benchmark index to 979.42 -- its highest intraday level in eight months.
"It was a very strong breakout for the S&P 500, and volumes were above average," said Edmund Shing, strategist at BNP Paribas.
"So we might not see a long bout of profit taking, because the danger is that investors have been caught short and have not been investing, and now they might start to panic."
Around Europe, UK's FTSE 100 index gained 0.7 percent, Germany's DAX index rose 0.7 percent, and France's CAC 40 added 0.5 percent.
Ericsson dropped 6 percent after the telecom gear maker posted higher-than-expected core earnings but said the impact of the economic downturn on its key mobile networks market had become more notable.
Vodafone gained 2.5 percent after the world's largest mobile phone company by revenues reported in-line sales and reiterated its outlook.
Saint-Gobain surged 5.8 percent after the French building materials group said it sees signs that the construction market has reached the low point of the economic recession and would start to pick up.
Merck KGaA tumbled 12 percent after the German drugmaker posted weaker-than-expected quarterly results and on a negative opinion by a European regulatory body regarding the use of its cancer drug Erbitux.
(Reporting by Blaise Robinson; editing by Simon Jessop)