Buoyant banks help Europe stocks extend gains

PARIS, May 19 (Reuters) - European stocks rose in early trade on Tuesday, gaining ground for the fourth straight session and led by banking stocks such as BNP Paribas, while investors braced for key U.S. housing data.

At 0714 GMT, the FTSEurofirst 300 index of top European shares was up 1 percent at 868.14 points.

The index, which added 2.4 percent on Monday, has surged 35 percent since reaching a floor in early March, as fears over a global economic depression receded. "This rally has been a correction of the equity risk premium, and obviously not based on an improvement on the earnings side," said Arthur van Slooten, European equity and cross asset strategist at Societe Generale Corporate & Investment Banking.

"Investors should use an overdue technical correction to put more risk into portfolios," he said.

Banks gained ground again, with HSBC up 1.9 percent and BNP Paribas up 4.3 percent. The DJ STOXX banking index, which was up 2.7 percent on Tuesday, has jumped 112 percent since early March.

Bucking the trend, British retailer Marks & Spencer Group Plc dropped 5 percent after it posted an expected 40 percent slide in full-year profit and cut its final dividend by a third to conserve cash, just 12 months after increasing it.

(Reporting by Blaise Robinson)