* FTSEurofirst up 0.5 percent, led by oils, banks
* Automakers gain on euro weakness
* UBS rises on debt buyback
By Sitaraman Shankar
LONDON, Aug 11 (Reuters) - European stocks hit their highest
level in more than 6 weeks early on Monday, led by oil shares as
fighting between Russia and Georgia boosted oil prices, while
automakers gained from a weak euro.
At 0827 GMT, the pan-European FTSEurofirst 300 <>
index was up 0.5 percent at 1,204.70 points, after having hit a
high of 1,210.79, its strongest level since June 26.
Auto stocks gained as the euro traded as low as $1.4908
after suffering its biggest one-day drop since January 2001 on
Friday. The euro later recovered to above $1.50.
BMW <BMWG.DE> rose 3.4 percent, Daimler <DAIGn.DE> gained
2.7 percent, while Renault <RENA.PA> and Peugeot <PEUP.PA>
advanced about 2 percent.
Though oil gained $1.60 a barrel, it was still below $117,
and a long way below record highs above $147 hit last month.
"The key elements of this equities rebound are the drop in
both the euro and oil prices. Even the ECB seems to finally
recognise that the recession in Europe is just around the
corner," said Marc Touati, economist at Global Equities in
Paris.
"The U.S. economy is already getting better, while Europe's
is plunging ... with hopes of rate cuts, the euro is falling,
boosting the U.S. dollar, which prompts a retreat in oil
prices."
Dutch mail and logistics group TNT <TNT.AS> was a standout
gainer, jumping 3.5 percent after a source familiar with the
talks said U.S. delivery company United Parcel Service <UPS.N>
was in talks to buy TNT.
Shares in Swiss bank UBS <UBSN.VX> rose 4.3 percent after it
agreed on Friday to buy back $18.6 billion in auction-rate
securities (ARS) whose value collapsed during a global financial
crisis, and to pay $150 million to settle charges it misled
investors.
"UBS ... says that costs for the ARS buyback should not
exceed $900 million. On Friday, market participants expected up
to $2 billion," one Zurich-based trader said.
Across Europe, Britain's FTSE 100 <> was up 0.7
percent, Germany's DAX <> up 0.4 percent and France's CAC
<> up 0.5 percent.
OIL STRONG ENOUGH, WEAK ENOUGH
While a 21 percent slide in crude since its July 11 high has
eased inflation worries and is generally positive for equities,
oil's uptick on Monday lifted heavyweight energy shares and
contributed to the FTSEurofirst's rise.
BP <BP.L>, Royal Dutch Shell <RDSa.L> and Total <TOTF.PA>
gained 1.3 to 1.8 percent.
Miners were in focus after Kazakhmys raised its stake in
rival Eurasian Natural Resources (ENRC) to above 25 percent and
Xstrata <XTA.L> looked to raise more than 5 billion pounds to
forge ahead with a hostile bid for Lonmin <LMI.L>.
Kazakhmys was up 2.3 percent, Xstrata up 1.1 percent and
Lonmin flat but ENRC tanked 4.2 percent after Kazakhmys said it
had no immediate plans for a bid.
"ENRC has also been very highly correlated to the Russian
market recently," said an analyst. Russian stocks hit their
lowest level for two years on Monday, unsettled by the military
conflict between Russia and Georgia.
Georgia shelled the capital of South Ossetia on Monday, a
Russian news agency said, while Tbilisi said dozens of Russian
bombers were attacking Georgia.
The FTSEurofirst is down 20 percent so far this year, led
lower by financials, which have been battered by a global credit
crisis. But the index is up 2.1 percent in August.
"If there is no major escalation in Ossetia, no negative
developments in tensions between the West and Iran and no major
hurricanes, stocks could end the summer on a positive note,"
said Touati.
(Additional reporting by Blaise Robinson in Paris; Editing by
Quentin Webb)
