* FTSEurofirst 300 index rises 0.4 percent
* Insurers among top gainers, sector outlook positive
* HSBC falls after earnings miss forecasts
By Atul Prakash
LONDON, Aug 5 (Reuters) - European shares touched two-month highs on Monday, led by insurers and buoyed by encouraging euro zone data and signs that U.S. monetary stimulus might not be trimmed next month.
The STOXX Europe 600 insurance sector rose 0.7 percent following strong results and positive broker comment, with CNP Assurances rising 3.4 percent, Legal and General 1.7 percent and ING Groep 1.2 percent.
"The European insurance sector has repaired its balance sheet and companies have been improving operations," Thomas Jacquet, insurance analyst at Exane BNP Paribas, said.
"It's also positive that future cash flows could be distributed or deployed," said Jacquet, who upgraded his stance on CNP Assurances to "outperform" from "neutral".
Deutsche Bank, meanwhile, raised its price target on France's AXA to 20 euros from 18.
Some other financials were in demand, with Lloyds rising 3.9 percent as traders cited a Financial Times report saying Chief Executive Antonio Horta-Osorio had told potential investors he expected to see up to 70 percent of the bank's earnings returned to shareholders by 2015.
But HSBC fell 2.4 percent after half-year earnings missed expectations due to a fall in revenue.
At 0831 GMT, the FTSEurofirst 300 index of top European shares was up 0.4 percent at 1,230.03 points, its highest since late May.
"The market is getting some support as the (U.S. stimulus) tapering timetable is likely to be changed," Mike van Dulken, head of research at Accendo Markets, said. "The market still has a bullish bias and we could revisit the May highs."
Sentiment improved after Friday's softer-than-predicted U.S. jobs data raised expectations a withdrawal of stimulus would be delayed, and a survey on Monday showed euro zone business expanded for the first time in 18 months in July, suggesting the region's economy is starting to stabilise.
Danone fell 1.2 percent after New Zealand's Fonterra, the world's biggest dairy exporter, said it had found bacteria in some products that could cause botulism. In response, China has halted the import of some dairy products, while Danone said it has recalled products that may have contained the contaminated whey.