* Pan-European FTSEurofirst 300 up 2.6 pct
* Oils, banks top gainers
* Index still on track for worst month on record
By Sitaraman Shankar
LONDON, Oct 17 (Reuters) - European shares jumped in early
trade on Friday, tracking gains in the United States and Asia,
as investors picked up battered banks and energy shares were
lifted by a rise in crude.
At 0839 GMT, the FTSEurofirst 300 <> index of top
European shares was up 2.7 percent at 881.34 points.
Oil groups BP <BP.L>, Total <TOTF.PA> and Shell <RDSa.AS>
climbed 4.9-5.7 percent as crude rose nearly $1.70 to $71.50 a
barrel amid growing expectations of an OPEC production cut.
Italian bank UniCredit <CRDI.MI> jumped 11 percent after
Libyan interests said they held a small stake in the group.
Intesa SanPaolo <ISP.MI> and HSBC <HSBA.L> gained 1.9 and
1.4 percent respectively.
The FTSEurofirst 300 index rose 10 percent on Monday and 3
percent on Tuesday, helped by efforts by governments to thaw
interbank lending, but suffered falls of 6.5 percent and 5
percent on the next two days as fears of a recession took grip.
"This is the most volatile week we've seen," said Thierry
Lacraz, strategist at Swiss bank Pictet in Geneva. "The sole
intelligent thing is to remain on the sidelines and not make any
huge bets."
"The global economic environment is still very negative,
especially in the United States, where we've seen a dramatic
drop in industrial production," he said.
But he added that falling oil prices -- crude is now at half
the price it was in July -- would boost sectors like retail, and
the reduction in interbank rates would be positive for October.
Across Europe, Britain's FTSE <>, Germany's DAX
<> and France's CAC <> posted gains of 2.2-3.5
percent.
TECHS JUMP ON IBM, GOOGLE
The DJ Stoxx European technology index was the top sectoral
percentage gainer, jumping 6 percent, after Internet search and
advertising group Google <GOOG.O> defied the economy to beat
forecasts, and tech services group IBM <IBM.N> said it would
meet long-term goals.
Handset makers Ericsson <ERICb.ST> and Nokia <NOK1V.HE> led
the way in Europe, rising 6.3 and 8.8 percent. Nokia posted a
fall in third-quarter earnings on Thursday but sounded a
reassuring note about cellphone volumes for the full year.
Shares in auto group Daimler <DAIGn.DE> jumped 7.6 percent
after sources said private equity group Cerberus was in talks to
buy Daimler's remaining stake in Chrysler. Daimler declined to
comment.
BMW <BMWG.DE> jumped 5.4 percent and Renault <RENA.PA> 3
percent on Goldman Sachs upgrades.
The FTSEurofirst 300 has fallen 17 percent so far this
month, on track for its worst month on record.
The index has been sideswiped by a credit market crisis that
piled up losses at big banks, froze interbank lending and slowed
the economy. It is down more than 40 percent this year, also the
worst on record.
The benchmark now trades at a price to earnings ratio of 7.5
on a one-year forward basis, a valuation many analysts say is
undemanding. Dividend yield is at 6 percent.
Analysts said the gyrations of markets afforded some
opportunities.
"Selling volatility is an intelligent strategy; some of our
clients are selling calls," said Pictet's Lacraz.
(Editing by David Cowell)
