* FTSEurofirst 300 index rises 2.1 pct
* China PMI data lifts economic recovery hopes
* Oil & gas, banks, mining top sectoral gainers
By Peter Starck
FRANKFURT, June 1 (Reuters) - European shares rose almost
across the board on Monday as data showing China's manufacturing
sector continued to expand in May boosted Asian stocks, adding
to the positive sentiment seen in Wall Street's higher close on
Friday.
At 0818 GMT the FTSEurofirst 300 <> index of top
European shares was up 2.1 percent at 879.81 points, having hit
880.55 points -- its highest level since Jan. 9.
"The trigger for the rally is the Chinese PMI. There are
close (economic) ties between China and Europe, and Europe
benefits from better economic data there," said Heino Ruland,
analyst at Ruland Research.
China's official purchasing managers' index (PMI) in May
recorded its third straight month above the mark of 50 that
separates expansion from contraction, fuelling optimism that the
worst of the global downturn may be over. []
"Three consecutive months of readings above 50 really shows
that Chinese stimulatory policy is gaining traction. It looks
like an economic recovery is well underway in China, possibly
leading to a sustained rally and re-rating of commodity prices
and associated stocks," IG Markets said in a note.
Basic resources, which includes mining and steel companies
seen by analysts as among beneficiaries of economic growth in
China, was the main gainer, with the DJ Stoxx sector index
<.SXPP> up 6.2 percent at its highest level since mid-October.
Steelmaker ArcelorMittal <ISPA.AS> rose 6.8 percent and
among miners Rio Tinto <RIO.L> was up 5.8 percent, Anglo
American <AAL.L> up 6.1 percent and BHP Billiton <BLT.L> put on
4.3 percent. London copper futures <MCU3> rose to a seven-month
high. []
A 2-percent rise in the price of crude oil <CLc1>, also to a
seven-month high [], underpinned energy shares, with
Total <TOTF.PA> up 2.2 percent, Royal Dutch Shell <RDSa.L> 1.7
percent higher and StatoilHydro <STL.OL> gaining 2.4 percent.
In euro zone data, manufacturing PMI rose to a seventh-month
high of 40.7, up from 36.8 in April and just above the flash
reading and economists' expectations for it to hit 40.5.
AUTOS UP AHEAD OF GM BANKRUPTCY
European auto shares also rose, with the DJ Stoxx European
sector index <.SXAP> up 4.3 percent, after U.S. government
officials said carmaker General Motors Corp <GM.N> would file
for bankruptcy later on Monday. [] []
Peugeot <PEUP.PA> rose 6.9 percent, Renault <RENA.PA> added
5.4 percent, Daimler <DAIGn.DE> was up 5.8 percent and BMW
<BMWG.DE> gained 3.8 percent -- all outperforming Fiat <FIA.MI>,
up 0.8 percent, after the Italian carmaker failed to find favour
for its bid for GM's European units.
Banks <.SX7P> added the most points to the European top-300
index, with Societe Generale <SOGN.PA> up 3.5 percent,
Commerzbank <CBKG.DE> 3.0 percent higher, Banco Santander
<SAN.MC> rising 2.7 percent and Royal Bank of Scotland <RBS.L>
adding 4.5 percent.
Across Europe, with trading volumes reduced by public
holidays in some countries, Britain's FTSE 100 index <> was
up 1.7 percent, Germany's DAX <> gained 3.1 percent and
the French CAC 40 <> added 2.3 percent.
Europe's benchmark index rose 0.7 percent last week. In May,
it rose 4 percent, a third straight monthly gain and its best
winning streak in two years. S&P Equity Research said the rally
looked unlikely to last.
"All risky assets have repriced simultaneously, from
industrial metals and commodities to equities and
crossover-grade bonds, in this recovery rally. This is quite
clearly irrational and unsustainable," S&P said in a note.
Later in the day investors will focus on the U.S. Institute
for Supply Management's (ISM) national factory report for May.
The ISM is forecast to rise to 42.2 from 40.1 in April,
according to 68 economists polled by Reuters. <G7TODAY>
ING said ISM was probably the best lead indicator for U.S.
GDP. "There is a real chance that today's ISM report will
produce a figure consistent with positive growth. However, there
are doubts as to how durable this story will be," ING said.
(Editing by Greg Mahlich)
