Europe shares jump on stimulus plans, commods lead

                                
 * FTSEurofirst 300 closes 6.9 percent higher
                                
 * Commodities stocks lead rally, tracking higher metals, oil
                                
 * Obama stimulus plan improves sentiment
                                
 
                                
 By Sarah Marsh
                                
 FRANKFURT, Dec 8 (Reuters) - European shares soared on
Monday, boosted by commodities and financial stocks, on optimism
that government stimulus packages would soften a global economic
downturn and improve demand for basic resources.
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
closed 6.9 percent higher at 848.48 points. 
                                
 The benchmark has fallen 43.7 percent so far this year,
hammered by a credit crisis that tipped major economies into
recession.
                                
 "The selling has dried up a little bit, and now you have the
hope for the American stimulus package, and hope that the U.S.
carmakers will be helped at least for the next few months," said
Giuseppe-Guido Amato, investment analyst at Lang & Schwarz.
                                
 "We were so oversold, everybody was waiting for a year end
rally," he said.
                                
 U.S. President-elect Barack Obama unveiled plans over the
weekend for the largest U.S. infrastructure investment programme
since the 1950s and to create 2.5 million jobs, which analysts
said could cost at least $500 billion.
                                
 "After the confirmation of Obama's spending plans, a breath
of fresh air has blown through the markets," said Andrew
Turnbull, senior sales manager at ODL Securities.
                                
 In addition, the White House said a deal on a rescue package
for U.S. automakers could be reached as early as Monday.
                                
 Commodity stocks led the rally in Europe, tracking metal and
crude prices, which rose sharply on hopes stimulus plans
worldwide would boost demand. The DJ Stoxx basic resources index
<.SXPP> soared 13.1 percent, with Anglo American <AAL.L>,
Vedanta Resources <VED.L> and BHP Billiton <BLT.L> up between
13.2 percent and 15.6 percent.
                                
 Among energy stocks, BG Group <BG.L>, Tullow Oil <TLW.L>, BP
<BP.L> and Royal Dutch Shell <RDSa.L> added between 8.1 percent
and 11.3 percent. Crude oil <CLc1> prices had gained 7.3 percent
by 1718 GMT, boosted by further evidence of supply cuts by top
exporter Saudia Arabia. [ID:nT120299]
                                
 "This is a level at which investors are saying they can buy
back into commodity shares, which have fallen so sharply, for
the long run," said Heinz-Gerd Sonnenschein, equity strategist
at Postbank in Bonn, Germany.
                                
 Heavily-weighted banks added the most points to the
benchmark index, with Barclays <BARC.L>, Lloyds TSB <LLOY.L>,
Royal Bank of Scotland <RBS.L> and UBS <UBSN.VX> up between 6.7
percent and 14.2 percent.
                                
 
                                
 BEAR MARKET RALLY
                                
 In other moves to stave off recession worldwide, India
planned $4 billion of extra spending and Australia began handing
out cash to families and pensioners, part of a stimulus package
unveiled in October.
                                
 Analysts said stimulus packages would improve sentiment, but
the banking system was yet to function smoothly despite
trillions of dollars of bailout plans across the globe.
                                
 A lack of bank-to-bank lending remains at the root of the
world economy's problems. Banks deposited 250 billion euros at
the European Central Bank overnight, a sign they are still
hoarding money as fears of further bank collapses persist.
                                
 Furthermore, economic data continues to paint a grim
outlook. German industrial production fell sharply in October,
pointing to a weak reading for the euro zone and sparking fears
the economy's fourth-quarter performance could be one of the
worst since Germany reunified in 1990. [ID:nL837543]
                                
 "Whilst the upturn (in stocks) looks strong ... the economic
data we have seen of late would lead us to believe that this is
simply another bear market rally," Ryan Kneale, markets analyst
at BetsForTraders.com, wrote in a note.
                                
 As a standout loser, Carphone Warehouse <CPW.L> fell 4.3
percent after the co-founder of British mobile phone retailer,
resigned as deputy chairman after failing to declare he had
pledged shares he owned in the company against personal loans.
There were concerns he might have to sell his 19 percent stake.
                                
 Across Europe, Britain's FTSE <.FTSE> rose 6.2 percent,
France's CAC <.FCHI> gained 8.7 percent and Germany's DAX
<.GDAXI> rose 7.6 percent.
 (Editing by Andrew Macdonald)
 (Additional reporting by Atul Prakash)