* FTSEurofirst up 0.2 pct, CAC hits highest since 2008
* Aegon gains 4 pct, Vodafone rises 1.7 pct
* AXA shares slip after disappointing results
By Atul Prakash
LONDON, Feb 21 (Reuters) - European shares edged higher in cautious trading on Friday, with France's CAC 40 hitting a 5-1/2-year peak as investors took their lead from gains on Wall Street and in Asia after robust U.S. factory data.
At 1126 GMT, the FTSEurofirst 300 index of top European shares was up 0.2 percent at 1,341.14 points after rising as high as 1,345.26, the highest since late January. The CAC reached its highest since 2008 and was also up 0.2 percent.
Wall Street's S&P 500 gained 0.6 percent on Thursday and Japan's Nikkei rose almost 3 percent on Friday on figures showing U.S. factory activity accelerated at its fastest pace in four years in February, a bullish indicator after some disappointing data.
"It is a positive sign that the U.S. economy is improving," David Battersby, investment manager at Redmayne-Bentley, said. "And if the economy is improving, then they will be sucking in imports. Things are getting back on track.
"Look at the companies that are international brands and have strong emerging market exposure because that's where, after the recent fallout, we have value," he said, adding that companies such as GlaxoSmithKline, Unilever and Diageo were quite attractive.
Dutch insurer Aegon rose 4 percent to the top of the FTSEurofirst 300's gainers' list, helped by an upgrade by Raymond James to "strong buy" from "outperform", with the brokerage saying a recent price decline provided a good entry point.
Vodafone gained 1.7 percent ahead of the completion of the sale of its stake in Verizon Wireless to U.S. peer Verizon. The deal will tee up an $84 billion payout in cash and shares at the end of February, which many may look to reinvest in stocks like Vodafone, analysts said.
"Certainly holders of Vodafone tend to be institutional and will play the re-weight somewhat by the book. Re-investment back into the Vodafone stub itself is certainly occurring apace," Monument Securities director Andy Ash said.
Bucking the trend, Europe's No. 2 insurer AXA fell 1.3 percent after posting a lower-than-expected quarterly profit, while Kering, owner of the Yves Saint Laurent, Bottega Veneta and Gucci brands, dropped 2.9 percent after reporting a sharply lower full-year profit.
Despite some soft results on Friday, data shows the earnings season in Europe has been relatively positive so far.
About 60 percent of STOXX 600 companies have reported results, of which 59 percent have met or beaten profit forecasts, with net profits rising 1.2 percent year-over-year on average, Thomson Reuters Starmine data shows.
"You want sectors which are benefiting from cash-flow momentum, earnings momentum and are not particularly expensive. The media sector ticks some of those boxes, but the sectors that work for us are mining, utilities and healthcare," Graham Bishop, senior equity strategist at Exane BNP Paribas, said.
Overall, investors remained positive on European stocks, with figures showing further brisk inflows into the region.
A poll by Thomson Reuters Lipper of 102 U.S.-based funds invested in European equities shows the funds added $502 million into European equities in the seven-day period to Feb. 19, a 34th straight week of net inflows - marking the longest streak of weekly inflows since Lipper started to monitor flows in 1992.
"The stock market has recovered very well and it is no longer cheap, but I think there is still value to be had," Battersby of Redmayne-Bentley said.
"It's like climbing a mountain really - the closer you get to the top, the windier it's going to become."
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