Economic recovery optimism lifts European shares

                                
 * FTSEurofirst 300 rises after closing above 1,000 on Wed
                                
 * Global recovery hopes buoy financials, commodity stocks
                                
 * Weak Oracle quarterly results hurt software sector
                                
 * For up-to-the-minute market news, click on [STXNEWS/EU]
                                
 
                                
 By Dominic Lau
                                
 LONDON, Sept 17 (Reuters) - European shares rose in early
trade on Thursday, extending the previous session's sharp gains,
as renewed hopes of a global economic recovery buoyed demand for
riskier assets like equities.
                                
 By 0742 GMT, the FTSEurofirst 300 <.FTEU3> index of top
European shares was up 0.6 percent at 1,011.79 points. It
rallied 1.4 percent on Wednesday to close above 1,000 for the
first time since early October 2008.
                                
 The pan-European index has rallied nearly 57 percent since
hitting a floor in early March, but is still down 13 percent
from its level in mid-September 2008, before the bankruptcy of
Lehman Brothers.
                                
 "Policymakers have made it plain that they are going to do
everything they can to sort out this problem," Neil Dwane,
European chief investment officer at Allianz Global Investors'
RCM, said.
                                
 "Investors are now realising that interest rates are going
to remain low, bond rates are going to remain low and therefore
you might as well take risk, and at the moment there is only one
place for you to take risk -- it's equities."
                                
 Banks <.SX7P>, which have soared 174 percent since early
March, were in demand, with Barclays <BARC.L>, HSBC <HSBA.L>,
Natixis <CNAT.PA>, Societe Generale <SOGN.PA>, UBS <UBSN.VX> and
BNP Paribas <BNPP.PA> up 1.1-4.4 percent.
                                
 Citigroup said in a note that it preferred sectors like
financials and energy as they "should continue to benefit from
an earnings recovery and are reasonably valued."
                                
 "After the biggest fall in over two decades, global 12-month
forward earnings expectations have risen by almost 10 percent
since May lows. It looks like we have entered the recovery phase
of the profits cycle," the broker said.
                                
 Among energy stocks, BP <BP.L>, Royal Dutch Shell <RDSa.AS>
and Total <TOTF.PA> added 0.8-0.9 percent. Oil <CLc1> steadied
above $72 a barrel, taking a breather after a rise of more than
2 percent the previous day.
                                
 Tullow Oil <TLW.L> surged 4 percent, extending Wednesday's
9.2 percent rise, after the oil explorer said it had struck what
may turn out to be the largest oil find yet in a block it plans
to partly sell-off in Uganda's Lake Albert basin.
                                
 Miners also firmed, with Rio Tinto <RIO.L>, BHP Billiton
<BLT.L>, Anglo American <AAL.L>, Xstrata <XTA.L>, Kazakhmys
<KAZ.L> and Randgold Resources <RRS.L> up 0.6-2 percent.
                                
 Across Europe, Britain's FTSE 100 <.FTSE> rose 0.7 percent,
Germany's DAX <.GDAXI> advanced 0.5 percent and France's CAC 40
<.FCHI> gained 0.6 percent.
U.S. stocks rose for a third day on Wednesday, hitting fresh
2009 highs in a broad-based rally after data suggested a
stronger-than-expected global recovery. Asian stocks hit their
highest level in 13 months on Thursday.
                                
 U.S. August housing starts and building permits, along with
the September Philly Fed index and the latest weekly initial
jobless claims, will provide a further gauge of the state of the
world's largest economy.
                                
 
                                
 SAP, INFINEON DOWN
                                
 SAP <SAPG.DE>, Software AG <SOWG.DE> and Sage Group <SGE.L>
slipped 0.7-1.1 percent after Oracle Corp's <ORCL.O> quarterly
software sales came in sharply below expectations, dashing hopes
that corporate technology spending was rebounding.
[ID:nN16146835]
                                
 Within the technology sector, Infineon <IFXGn.DE> lost 3.4
percent after Banc of America-Merrill Lynch downgraded the
German chipmaker to "underperform" from "buy".
                                
 TomTom <TOM2.AS> shed 3.6 percent after Banc of
America-Merrill Lynch cut the navigation device maker to
"underperform". The broker said it saw better alternatives in
Garmin <GRMN.O> and Logitech <LOGN.VX>, which rose 0.5 percent.
                                
 Among other individual movers, EADS <EAD.PA> advanced 5.8
percent, topping the FTSEurofirst 300 gainers, after Morgan
Stanley upgraded the Airbus maker's parent to "overweight" from
"equal weight".
                                
 British Airways <BAY.L> climbed 3.5 percent after Goldman
Sachs added the airline to its "conviction buy list".
                                
 Volkswagen <VOWG.DE> added 0.6 percent. The Financial Times
said Europe's largest carmaker was considering overhauling its
trucks business in a move that could herald a tie-up with German
truck maker MAN AG <MANG.DE>, whose shares gained 3.2 percent.
                                
 (Editing by Lin Noueihed)