* FTSEurofirst 300 up 0.8 percent after Friday's 4-week low
* Telenor up after merger deal for unit; supports telecoms
* Banks, miners up
* For up-to-the-minute market news, click on []
By Simon Falush
LONDON, Oct 5 (Reuters) - European shares ended 0.8 percent
higher on Monday as better-than-forecast data in the United
States and Europe helped lift banks, while telecoms were boosted
by merger activity between Telenor <TEL.OL> and Alfa Group.
The FTSEurofirst 300 <> index of top European shares
closed up 0.8 percent at 971.21 points, after falling for three
sessions in a row.
The index, which slumped 45 percent last year, is up 17
percent in 2009 and has surged over 50 percent since hitting a
record low in early March.
Data on both sides of the Atlantic also reassured investors
after non-farm payrolls data contributed to a 1.9 percent fall
on Friday.
The U.S. service sector expanded in September at a faster
pace than expected, with the Institute for Supply Management's
services index coming in at 50.9, compared to a forecast of 50.
Markit's Eurozone Services Purchasing Managers' Index of
around 2,000 companies showed the euro zone's services economy
returned to growth for the first time in 16 months in September
at a slightly better rate than first expected, but job losses
grew. []
Banks, which are sensitive to changes in risk appetite,
gained. Barclays <BARC.L>, HSBC <HSBA.L>, BNP Paribas <BNPP.PA>
and Deutsche Bank <DBKGn.DE> added 0.5-1.7 percent.
Q3 EYED
However, investors said sentiment was still relatively
fragile and third-quarter results from the U.S. companies, which
get under way this week with aluminium giant Alcoa <AA.N>, will
determine where share prices head.
"Investors will be looking at what guidance companies will
give for next year. I think they will disappoint so it will be a
case of one step forward, one step back," said Heinz-Gerd
Sonnenschein, equity markets strategist at Postbank, in Bonn.
Miners advanced after RBS upgraded its outlook for metals
prices and said sovereign wealth funds might take an interest in
the sector.
BHP Billiton <BLT.L>, Anglo American <AAL.L>, Antofagasta
<ANTO.L>, Rio Tinto <RIO.L>, Xstrata <XTA.L> and Eurasian
Natural Resources <ENRC.L> rose 2 percent to 4.7 percent.
Telenor shares jumped 14.6 percent after the company and its
key partner in Russia, the Alfa Group, agreed to merge their
Russian and Ukrainian holdings into a New York-listed mobile
operator worth over $23 billion. []
The news helped the telecom sector, with TeliaSonera
<TLSN.ST>, Mobistar <MSTAR.BR>, Vodafone <VOD.L>, Telefonica
<TEF.MC> adding 0.9-3.5 percent.
Drugmakers shrugged off early weakness, with AstraZeneca
<AZN.L> up 0.8 percent, boosted as a new diabetes drug has been
approved for sale in Europe. []
Novartis <NOVN.VX>, Sanofi-Aventis <SASY.PA> and Shire
<SHP.L> added 0.2-2 percent.
ArcelorMittal <ISPA.AS> rose 1.1 percent after its chairman
and main owner, Lakshmi Mittal, told The Financial Times
newspaper it was close to pulling out of a $20 billion plan to
build two steel plants in India due to difficulties buying land.
Energy stocks were among a limited number of stocks in
negative territory, pressures as crude fell below $69 per
barrel.
Royal Dutch Shell <RDSa.L>, Total <TOTF.PA> and Petroplus
<PPHN.VX> fell 0.4-0.5 percent.
Across Europe, Britain's FTSE 100 index <>, Germany's
DAX <> and France's CAC 40 <> rose 0.7-0.8 percent.
(Additional reporting by Atul Prakash; Editing by Dan Lalor)
