European shares begin new year on strong note

                                
 * FTSEurofirst 300 rises 1 pct on first trading day of year
                                
 * Autos among top gainers; Porsche jumps on US court ruling
                                
 * For up-to-the-minute market news, click on [STXNEWS/EU]
                                
 By Atul Prakash
                                
 LONDON, Jan 3 (Reuters) - European shares started the first
trading session of the year on a strong footing on Monday after
gaining more than 7 percent in 2010 as money managers got fresh
allocations, with Porsche leading auto shares higher.
                                
 Porsche <PSHG_p.DE> jumped 11 percent after a U.S. federal
judge dismissed a lawsuit by 10 hedge fund groups accusing the
German automaker of cornering the market in shares of Volkswagen
AG <VOWG_p.DE>. [ID:nN30119446]
                                
 The STOXX Europe 600 Automobile and Parts index <.SXAP>
surged 2.8 percent, while the FTSEurofirst 300 <.FTEU3> index of
top European shares was up 1 percent at 1,132.86 points at 0846
GMT. Volumes were expected to be thin during the session as
Britain's FTSE 100 <.FTSE> was closed for a holiday.
                                
 "Sentiment is positive and that is mainly because of the
seasonality. Money managers typically get some new inflows at
the start of a year and they put them to work," said Philippe
Gijsels, head of research at BNP Paribas Fortis Global Markets.
                                
 "I guess this positive mood will continue for the next
couple of days, but after that markets will start to look at
issues such as economic growth in the United States and
inflation rates in China."
                                
 Weekend data showed China's factory inflation cooled in
December as manufacturers expanded more slowly after a strong
run in growth, reducing the need for the country's central bank
to tighten monetary policy too far. [ID:nTOE70000G]
                                
 A decision by China to raise interest rates on Dec. 25 had
sparked worries about global growth, with analysts expecting the
country's central bank to raise rates twice more in the first
half of 2011.
                                
 
                                
 VOLATILITY TO CONTINUE
                                
 Analysts said that equity markets are expected to remain
volatile in 2011 as issues such as the euro zone debt situation
might resurface. Greece and Ireland received bailout packages of
billions of euros to manage their debts.
                                
 Spain has come under increasing pressure from international
debt markets on concerns it may be forced to follow Greece and
Ireland and seek an EU/IMF bailout, but while bond yields have
risen, demand for Spanish debt remains solid.
                                
 China's Vice Premier Li Keqiang wrote in an editorial in El
Pais on Monday that Chinese officials have faith in Spain's
financial system and will continue to take part in government
debt auctions. 
                                
 Among individual movers, Norway's Seadrill <SDRL.OL> rose
1.8 percent after the company said it would acquire two
ultra-deepwater semi-submersible drilling rigs.
 (Editing by Hans Peters)