European stocks rise, banks, commodities lead

                                
* FTSEurofirst 300 index up 2 pct
* RBS gains after Q1 results
                                
 * Commodities up, tracking higher crude prices
                                
 LONDON, May 8 (Reuters) - European shares were higher in
afternoon trading on Friday as banks rose, with RBS <RBS.L>
gaining after it posted a small first quarter loss and energy
stocks rising on higher crude prices.
                                
 By 1347 GMT, the pan-European FTSEurofirst 300 <.FTEU3>
index of top shares was up 2 percent at 869.45 points. It
earlier pared gains after the U.S. Labor Department revised
March and February payroll figures upwards. 
                                
 "Although the market has come a long way ... after such a
decent run over the last couple of months the markets are
looking a little overbought. Most people expect some kind of
consolidation, though the market does not give the appearance it
wants to consolidate," said Mike Lenhoff, strategist at Brewin
Dolphin.
                                
 "Whether the market might be taking this opportunity with
these numbers I do not know ... but it is due for a bit of a
correction."
                                
 U.S. employers cut a smaller-than-expected 539,000 jobs in
April, the smallest amount since October, according to
government data that hinted at some improvement in the labour
market and the recession-hit economy. [ID:nN07416806]
                                
 The Labor Department said the unemployment rate soared to
8.9 percent, the highest since September 1983. March's payrolls
figure was revised to show a decline of 699,000, compared with a
previously reported drop of 663,000. Job losses in February were
bumped up to 681,000 from the previously estimated 651,000.
                                
 Analysts polled by Reuters had forecast non-farm payrolls
dropping 590,000 in April. The unemployment rate had been
forecast to rise to 8.9 percent from 8.5 percent in March.
                                
 
                                
 RBS GAINS
                                
 Banks added the most points to the index. Part-nationalised
lender Royal Bank of Scotland soared 11.3 percent after it
posted a small first quarter loss as strong growth at its
investment banking arm mitigated the impact of impairment losses
and credit market writedowns totalling 5 bln pounds.
[ID:nL8233801]
                                
 HSBC <HSBA.L>, Banco Santander <SAN.MC>, Credit Suisse
<CSGN.VX>, BNP Paribas <BNPP.PA> and UniCredit <CRDI.MI> were up
3.2-7.5 percent.
                                
 U.S. regulators told top banks on Thursday to raise $74.6
billion to build a capital cushion officials hope will restore
faith in financial firms and set a course out of the deepest
recession in decades. [ID:nN07333426]
                                
 Energy stocks were higher as crude <CLc1> rose 2.4 percent.
Spanish oil major Repsol <REP.MC> gained 2.6 percent after it
posted a clean operating profit at current cost of supply of 746
million euros, beating estimates. [ID:nMDT006361]
                                
 BG Group <BG.L>, BP <BP.L>, Royal Dutch Shell <RDSa.L> and
Total <TOTF.PA> were 1.2-3.2 percent higher. 
                                
 On the downside, drugmakers were in the doldrums. Novartis
<NOVN.VX> and Roche <ROG.VX> were down 1.5 percent and 0.4
percent respectively.
                                
 Across Europe, the FTSE 100 <.FTSE> index was up 1.2
percent, Germany's DAX <.GDAXI> was up 2.5 percent and France's
CAC 40 <.FCHI> was up 1.4 percent.
 (Reporting by Joanne Frearson; Editing by David Cowell)