LONDON, Feb 15 (Reuters) - A recovery rally in European stocks gathered pace for a second day on Thursday after investors brushed off a spike in U.S. inflation, turning their focus back to strong company earnings from heavy hitters including Europe's largest aerospace firm, Airbus.
The pan-European STOXX 600 was up 0.5 percent by 0824 GMT, hitting its highest level in a week. The main European stock index was still down 6.5 percent from its 2 1/2-year peak hit as recently as Jan 23.
Cyclical sectors drove the market higher, with basic resources, industrials, banks and technology stocks the best performers, recovering from their sharp drop last week.
Earnings took centre stage once more, with strong results driving the top gainers Airbus, Ipsen, Aegon, and Schneider Electric.
Airbus shares jumped 8.8 percent after Europe's largest aerospace firm beat profit and earnings expectations, though it booked a new 1.3 billion euro charge on its A400M military plane.
Shares in Dutch insurer Aegon gained 4.4 percent after the firm reported a doubling of quarterly net income and raised estimates for future earnings, thanks to a tax cut in the U.S. where it does around 60 percent of its business.
Insurer NN Group fared less well than its rival Aegon, however. The Dutch firm's shares fell 3 percent after it reported profit undershooting analysts' expectations.
Another notable faller was Nestle whose shares hit a 10-month low, down 2.4 percent after the Swiss food giant reported last year's organic growth was the weakest since it began recording the measure in 1996.
Standard Life Aberdeen shares sank 4.9 percent after Lloyds and Scottish Widows axed a 100 billion pound asset management mandate with the firm.
Bank and insurance firm Old Mutual, and mining company Anglo American rose to the top of Britain's FTSE 100 after President Jacob Zuma resigned in South Africa, sending the rand to near three-year highs.
Both firms derive a high proportion of their revenue in South Africa, whose parliament was set to elect a new President later on Thursday. (Reporting by Helen Reid, Editing by Kit Rees)