Europe stocks rebound from 6-wk closing low

                                
 * FTSEurofirst 300 up 1.4 pct, halting 2-week retreat
                                
 * Stocks were oversold; short covering seen -analyst
                                
 * For up-to-the-minute market news, click on [STXNEWS/EU]
                                
 
                                
 By Blaise Robinson
                                
 PARIS, July 6 (Reuters) - European stocks rose in early
trade on Tuesday in a broad rally, with miners and banks among
the top gainers, boosted by short covering after an almost
uninterrupted two-week retreat.
                                
At 0750 GMT, the FTSEurofirst 300 <.FTEU3> index of top
European shares was up 1.4 percent at 980.28 points, after
losing 9 percent in two weeks.
                                
 The Euro STOXX 50 <.STOXX50E>, the euro zone's blue chip
index, gained 1.4 percent at 2,543.06 points, bouncing back
towards 2,555.84, a key 38.2 percent Fibonacci retracement of
the index's rise from its March 2009 low and its peak in last
January.
                                
 "Stocks were pretty much oversold. What we're seeing today
is essentially short covering," said Achim Matzke, European
stock indexes analyst at Commerzbank in Frankfurt.
                                
 "Charts continue to show that investors have lost faith in
corporate profit outlooks, and that we may not revisit the
year's highs any time soon."
                                
 Miners were among the top gainers, with Rio Tinto <RIO.L>
adding 2.9 percent and Xstrata <XTA.L> climbing 3.5 percent,
while recently-hammered banks recovered, with BNP Paribas
<BNPP.PA> adding 1.4 percent and Banco Santander <SAN.MC> rising
2 percent.
                                
 The banking sector's stress tests were still in focus on
Tuesday, after sources told Reuters European Central Bank
President Jean-Claude Trichet will meet with Europe's top banks
to discuss the tests ahead of the publication of the results
later this month.
                                
 Despite Tuesday's rally, IG Markets analyst Philippe De
Vandiere said investors remain cautious and the market could
move sideways in the short term.
                                
 "There is a lack of transparency on the stress tests, and
people are also prudent ahead of the earnings season for which
forecasts look a bit too optimistic," he said.
                                
 "But the focus today will be on the ISM figure. The data has
the potential to move the market after the poor macro numbers we
just got.."
                                
 Around Europe, UK's FTSE 100 index <.FTSE> was up 1.3
percent, Germany's DAX index <.GDAXI> up 1.2 percent, and
France's CAC 40 <.FCHI> up 1.7 percent.
                                
 Shares of beleaguered oil major BP <BP.L> climbed 3.7
percent after RBS upgraded its recommendation on the stock to
"buy" from "hold", citing valuation grounds, and after comments
made on Monday by Shokri Ghanem, chairman of Libya's National
Oil Corporation.
                                
 Ghanem said in a telephone interview: "I think that BP
shares are good value for bargain hunters."
 (Editing by Louise Heavens)