* FTSEurofirst 300 up 1 percent
* French banks, oils top gainers
* Volkswagen continues counter-market move, falls 10 pct
By Sitaraman Shankar
LONDON, Oct 21 (Reuters) - European shares rose early on
Tuesday, extending their winning streak to a third day, as
investors cheered details of a French government move to bolster
banks and oil shares rose as crude stayed near $75 a barrel.
At 0834 GMT, the FTSEurofirst 300 <> index of top
European shares was up 1 percent at 937.49 points, with banks
and energy stocks the top gainers.
BNP Paribas <BNPP.PA> jumped 7.8 percent, Societe Generale
<SOGN.PA> 9.9 percent and Credit Agricole <CAGR.PA> 14.1 percent
after France outlined plans to lend 10.5 billion euros to the
country's top six banks before the year end.
Among oil stocks, heavyweights Royal Dutch Shell <RDSa.L>
and Total <TOTF.PA> gained 2 percent.
Shares on Wall Street gained on Monday after Federal Reserve
Chairman Ben Bernanke backed more government spending to help
the economy, and Japanese stocks rose sharply on Tuesday.
"Bernanke's comments are being interpreted to mean that he
wants these measures to additionally support steps taken
already, and that this would prevent a U.S. recession becoming
too entrenched," said UniCredit strategist Tammo Greetfeld in
Munich.
UniCredit changed its stance on European equities to
"overweight" from "underweight" last week, and Greetfeld said
that he expected recent measures to address interbank and
interest rate fears, adding that shares already priced in a
recession.
Swiss drugmaker Roche <ROG.VX> was a heavily weighted loser
on the pan-European index, falling 2 percent after it posted a
fall in nine-month sales.
Volatile Volkswagen <VOWG.DE> shares fell 10 percent, adding
to recent big falls after a series of gains against the market
trend attributed by traders to a short squeeze.
British banks HSBC <HSBA.L> and Royal Bank of Scotland
<RBS.L> fell 3.7 and 5.4 percent after sharp gains on Monday.
A YEAR TO FORGET
Despite gains on Friday and Monday, the FTSEurofirst 300
remains on track for its worst month since September 2002, as
worries over the economy replaced fears of bank collapses once
governments across the world moved to bail out lenders.
The index has fallen 11.9 percent in October and 38 percent
so far this year, lifting its dividend yield to 5.5 percent,
well above the 3.96 percent offered by 10-year European
government bonds <EU10YT=RR>.
Tech stocks were weaker after U.S. chipmaker Texas
Instruments <TXN.N> issued a disappointing outlook.
Nokia <NOK1V.HE>, Ericsson <ERICb.ST> and Infineon
<IFXGn.DE> fell 0.7-2.5 percent.
Renewable Energy <REC.OL> slid 8.5 percent after the
Norwegian group posted a smaller-than-expected rise in core
earnings for the third quarter.
The focus shifts to U.S. earnings later in the day, with
drugmaker Pfizer <PFE.N>, diversified manufacturer 3M <MMM.N>
chemicals group DuPont <DD.N> and computer maker Apple <AAPL.O>
among a clutch of companies due to report.
(Editing by Quentin Bryar)
