* FTSEurofirst 300 index rises 0.5 percent
* BP rises after plugs Gulf of Mexico well
* K+S gains on China's Potash interest report
* For up-to-the minute market news, click on []
By Joanne Frearson
LONDON, Sept 20 (Reuters) - European shares rose on Monday,
after four days of losses as investors remained optimistic ahead
of Tuesday's Federal Reserve meeting, with K+S <SDFG.DE> gaining
on a media report of Chinese interest in Canada's Potash
<POT.TO>.
By 0849 GMT, the pan-European FTSEurofirst 300 <>
index was 0.5 percent higher at 1,078.85 points after retreating
on Friday when figures showed U.S. consumer sentiment dropped to
its lowest level in more than a year.
"After the falls on Friday, we have not had any bad news on
the weekend so sentiment is more positive," said Will Hedden,
sales trader at IG Index. "But we expect a choppy week, with the
main importance being the Fed meeting tomorrow."
"There is plenty of pressure on the Fed to put forward what
they are going to do to stop the U.S. going into a double dip
recession. It will be the main focus of the week and the market
could go either way. We expect trading to be quite volatile."
The Fed is expected to tread water at its policy-setting
meeting, with no new steps to ease monetary policies but with a
renewed promise to keep its portfolio from shrinking.
[]
Chemical stocks featured among the top performers. K+S
<SDFG.DE> rose 3.3 percent on a media report that Chinese
chemical conglomerate Sinochem Group has formally asked the
government to back a bid for Potash Corp -- a rival of K+S.
"(This) might again lead to speculations on a higher bid for
Potash Corp which would also work positive for peer K+S," a
trader at broker Alpha writes.
Elsewhere, French defence company Safran <SAF.PA> gained 3.2
percent after investors applauded the company's acquisition of
L-1 Identity Solutions and its core biometric identity business.
[]
However, French aerospace supplier Zodiac Aerospace
<ZODC.PA> fell 2.8 percent after it announced late on Friday
that key family shareholders had signed a pact not to sell their
shares until April 2012.
BP RISES
Commodity stocks were in demand. BP gained 1.4 percent after
it said it permanently "killed" its deep-sea well in the Gulf of
Mexico that ruptured in April.
Its peers, BG Group <BG.L>, Royal Dutch Shell <RDSa.L> and
Total <TOTF.PA> were 1.2 to 1.5 percent higher.
On the downside, banking stocks edged lower, with the STOXX
Europe 600 Banks <.SX7P> slipping 0.1 percent. French bank
Natixis <CNAT.PA> fell 1.6 percent, on its first day on Paris's
blue-chip index, after Credit Suisse cuts its rating on the
stock to 'neutral' from 'outperform'.
Greek banks <.FTATBNK> rose 0.4 percent. Greece said it will
postpone stress testing the country's banks for later in the
autumn, a source at the central bank told Reuters on Monday.
A source also told Reuters on Sunday Greece's international
lenders assured investors they would not abandon Athens at the
end of a three-year bailout plan if it fulfilled tough reforms
but failed to regain market trust. []
Technical's showed a key index was facing resistance. The
Euro STOXX 50 <>, the euro zone's blue chip index, rose
0.5 percent to 2,770.68 and was just under its 200-day moving
average of 2,778.43. The index fell below this level on Friday
after spending four sessions above it.
Across Europe, the FTSE 100 <> index was 0.9 percent
higher, Germany's DAX <> was up 0.5 percent and France's
CAC 40 <> rose 0.8 percent.
The Thomson Reuters Peripheral Eurozone Countries Index
<.TRXFLDPIPU> gained 0.7 percent.
(Reporting by Joanne Frearson; Editing by Mike Nesbit)
