* FTSEurofirst 300 index closes up 0.4 percent
* Banks, commodities higher
* U.S. new housing starts jump
By Joanne Frearson
LONDON, July 17 (Reuters) - European shares closed higher on Friday for the fifth straight day, with banks and commodity stocks the biggest gainers, as investors confidence about a global economic recovery improves.
The pan-European FTSEurofirst 300 index of top shares closed up 0.4 percent at 870.56 points in choppy trade, having fallen earlier to 865.82 points.
The index is up around 7 percent this week, its best weekly gain since late November, and is up around 34 percent from its lifetime low of March 9.
"We have had a whole week of great gains. The market has been anticipating a decent set of earnings and the message the market has been looking for is that the corporate sector is behind the worst of the recession," said Mike Lenhoff, strategist at Brewin Dolphin.
"While some results are going to be negative they probably are not going to be as negative as they have been, while other companies are going to have positive earnings. Investors are becoming more confident that the recovery is now in its formative stages," he said.
The banking sector was higher, rebounding from earlier falls as investors digested results from U.S. peers Citigroup and Bank of America.
HSBC, BNP Paribas, Societe Generale and Banco Santander were up 0.3-1.6 percent.
Citigroup reported a $4.3 billion second-quarter profit thanks to gains on its Smith Barney deal, while Bank of America posted a quarterly profit that topped Wall Street forecasts.
ACCOR, CARREFOUR FALLS
However, General Electric Co said profit fell by almost half, on a deeper drop in revenue than Wall Street expected, as the slump that has gripped its finance and media businesses took hold of its heavy industrial units.
Energy stocks rose as crude oil gained 2.1 percent. BG Group, BP, Royal Dutch Shell and Total were up 0.3-1.7 percent.
Miners ticked up as copper gained 1.9 percent. Antofagasta, BHP Billiton, Eurasian Natural Resources Corporation, Rio Tinto and Xstrata were 0.5-5.8 percent higher.
On the downside, Accor lost 7.5 percent after second-quarter sales dropped 9 percent as the economic crisis weighed on its hotel business.
Carrefour was down 3.7 percent after, the world's second-biggest retailer behind U.S. group Wal-Mart, said second-quarter sales fell 1.2 percent, hurt by weaker western European markets, lower petrol prices and exchange rates.
Looking at macroeconomic data, helping buoy investor enthusiasm, new U.S. housing starts and permits jumped more than expected in June, propelled by a rise in single-family homes, a government report showed.
"Starts are at a very low level but we have established a base in the last six months and I would say this is confirmation that starts are not going to go any lower and the increase in permits might actually see thins move up from here," said Christopher Low, chief economist at FTN Financial.
Across Europe, the FTSE 100 index was up 0.6 percent, Germany's DAX was 0.4 percent higher and France's CAC 40 was up 0.6 percent. (Reporting by Joanne Frearson; Editing by Rupert Winchester)