Photo : AFP

LONDON, April 21 (Reuters) - European shares were higher on Tuesday, with Tesco (TSCO.L) leading retailers up, the day after investor worries that a recent strong run of corporate earnings was not sustainable led to a heavy fall.

At 0901 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 0.7 percent at 791.32 points, having recovered from a low of 781.80.

British supermarket giant Tesco (TSCO.L) rose 5 percent after the world's No.3 retailer showed its resilience to the economic downturn, posting a 10 percent rise in underlying annual profit to 3.1 billion pounds ($4.6 billion), a record for a British retailer.

Rivals Morrison (MRW.L) and Sainsbury (SBRY.L) were up 1.9 and 1.2 percent respectively. Primark owner Associated British Foods (ABF.L) rose 7 percent after beating forecasts with a 2 percent dip in half-year profit as growth at its discount fashion chain and sugar sales offset tough trading in other food areas.

But some financials extended declines from Monday, when Bank of America (BAC.N) disappointed investors with its results and raised fresh questions about the sector. Lloyds (LLOY.L), Societe Generale (SOGN.PA) and UBS (UBSN.VX) were down between 1.9 and 3.3 percent.

"There are still questions about banks' earnings and provisions," said Bernard McAlinden, strategist at NCB Stockbrokers.

"The market is likely to give back some more of its gains. It's as positive as you can be to say that we've seen the lows."

In macroeconomic news, Sweden's central bank cut interest rates by 50 basis points to a new record low of 0.5 percent on to fight the country's worst recession since the 1940s.

The UK's Consumer Price index was up 2.9 percent in the year to March, down from 3.2 percent the previous month.

Across Europe, Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC-40 .FCHI rose between 0.4 and 1 percent.

ENERGY SHARES RISE

Oils gained as crude futures CLc1 steadied below $46 a barrel after a nearly 9 percent fall on Monday. Total (TOTF.PA), ENI (ENI.MI) and BP (BP.L) rose between 0.3 and 1.2 percent.

Defensives such as utilities gained in the wake of Monday's slide. EON (EONGn.DE), GDF Suez (GSZ.PA) and RWE (RWEG.DE) were up between 1.7 and 2.7 percent.

Miners fell, as metals prices slipped. Anglo American (AAL.L), BHP Billiton (BLT.L) and Xstrata (XTA.L) were down between 0.9 and 2.3 percent. Actelion Ltd (ATLN.VX), Europe's largest biotech company, rose 9.5 percent after it more than doubled profit in the first quarter, beating analysts' expectations, as demand for its top-selling drug Tracleer kept increasing strongly. Drugmakers Novartis (NOVN.VX) and AstraZeneca (AZN.L) were 1 percent lower after being downgraded by Bank of America-Merrill Lynch. But Roche (ROG.VX), one of the companies the broker said remains among its key picks, was up 1.3 percent.

U.S. futures were marginally higher. Bank of New York BK is among U.S. companies reporting on Tuesday.

On Monday, the pan-European index fell 3.5 percent, following six weeks of gains that had seen it rise more than 26 percent from its March 9 lows. It fell 45 percent in 2008, battered by a banking crisis that helped to tip several major economies into recession. (Editing by Jon Loades-Carter)