* FTSEurofirst 300 index rises 0.3 percent
* Old Mutual gains as results beat forecast
* Greek shares fall after Moody's downgrade
* For up-to-the minute market news, click on []
By Joanne Frearson
LONDON, March 8 (Reuters) - European shares gained on
Tuesday, recovering from two days of losses, as concerns over
the impact of high crude prices on the economy eased after
Kuwait said OPEC was in talks to increase production.
By 0950 GMT, the pan-European FTSEurofirst 300 <>
index of top shares was 0.3 percent higher at 1,147.44 points.
After paring gains in early trade to turn flat, the index
recovered as it neared its 50 percent retracement levels of its
drop from a July 2007 high to its March 2009 low - a positive
signal for equities.
"Looks like we are in for a reasonable rally today, with the
fall in the oil price calming investor nerves," Mark Priest,
senior equities trader at ETX Capital in London, said. "But the
focus will remain on the Middle East."
Brent crude <LCOc1> dropped briefly below $113 after
Kuwait's oil minister said OPEC was in talks about a possible
production hike. An official increase would signal the group's
determination to keep the global recovery on track.
Investors are concerned that conflict in Libya and civil
unrest elsewhere in the oil-rich Middle Eastern region could
escalate and hit oil supplies.
Carmakers which react to changes in the oil price, were in
demand, with the STOXX Europe 600 Automobiles & Parts <.SXAP> up
1.8 percent. Volkswagen <VOWG_p.DE> gained 2 percent as traders
cited a UBS upgrade to "buy" from "neutral".
Broker upgrades also helped the telecommunication sector.
Vodafone <VOD.L> and BT Group <BT.L> gained 2.2 and 2.4 percent
respectively after traders said Morgan Stanley upgraded its
ratings to "overweight" from "equal-weight".
Looking at individual stocks, Wacker Chemie <WCHG.DE> rose
3.6 percent, with traders pointing to a UBS upgrade to "buy"
from "neutral".
Old Mutual <OML.L> rose 2.3 percent after the Anglo-South
African financial conglomerate beat profit expectations and said
it would stick to its three-year strategy.
GREECE FALLS
In the peripheral markets, the Athens General Exchange
<> which was closed for trading on Monday fell 1.9 percent
after ratings agency Moody's downgraded Greece by three notches
in the previous session. []L
Greek bank shares <.FTATBNK> fell 2.8 percent, with
investors expecting similar action on lenders to follow.
"Moody's downgrade of Greece's credit rating has sent bond
yield spreads above 920 basis points, hurting sentiment. There
are expectations of similar action on banks by the ratings
agency," said Theodore Mouratidis, an investment adviser at
Fortius Securities.
Across Europe, the FTSE 100 <> index was up 0.2
percent, Germany's DAX <> rose 0.4 percent and France's
CAC 40 <> was 0.3 percent higher.
(Reporting by Joanne Frearson; Editing by Erica Billingham)
