* FTSEurofirst 300 rises 3 pct, down 1.4 pct on the week
* U.S. bank deal, hopes over bailout vote boost banks
* Investors unruffled by bleak U.S. monthly jobs data
By Blaise Robinson
PARIS, Oct 3 (Reuters) - European stocks gained 3 percent on
Friday, as banks stocks rose, tracking a rally on Wall Street on
hopes a $700 billion bailout plan to stabilize financial markets
will be approved by the U.S. House of Representatives.
The FTSEurofirst 300 <> index of top European shares
closed 3 percent higher at 1,089.38 points. On the week, the
benchmark index lost 1.4 percent.
Recently hammered banks surged, with BNP Paribas <BNPP.PA>
gaining 9.4 percent, Barclays <BARC.L> rising 8.9 percent and
Credit Suisse <CSGN.VX> adding 8.3 percent.
The sector was also buoyed by news that Wells Fargo <WFC.N>
agreed to buy embattled bank Wachovia Corp <WB.N>, fuelling
hopes of more consolidation among banks.
Wells Fargo said it would buy Wachovia for about $16
billion, apparently besting a government-backed Citigroup Inc
<C.N> bid for some of the bank's assets.
The House of Representatives, which rejected a first version
of the plan, was expected to vote on the package on Friday. The
plan would help purge banks' balance sheets of bad
mortgage-related debt and unclog the credit market.
Hopes for the plan eclipsed bleak U.S. jobs data that showed
U.S. employers cut an unexpectedly large 159,000 jobs last month
--a ninth straight monthly fall in jobs and the deepest in 5-1/2
years, suggesting the U.S. economy may be in recession.
Economists surveyed by Reuters had forecast 100,000 jobs
would be cut.
A BIG 'IF'
"Let's assume the bill passes, and it's obviously a big
'if', we think that the stock market will start focusing much
more on the economic doldrums and the focus will be less on the
financials," said Franz Wenzel, strategist at AXA Investment
Managers, in Paris.
"The economic picture doesn't look bright, and stocks will
probably continue their rollercoaster ride on the day to day
news flow, but underneath the surface, we will see a shift in
sectors, with less downbeat sentiment on the financials."
The U.S. Federal Reserve's policy-setting Federal Open
Market Committee is next scheduled to meet on Oct. 28-29 but
there has been speculation central bankers could coordinate a
global rate cut if financial turmoil persists.
Germany's DAX index <> rose 2.4 percent, UK's FTSE 100
index <> gained 2.3 percent and France's CAC 40 <>
added 3 percent.
Shares in German lender Hypo Real Estate <HRXG.DE> jumped 41
percent on expectations that final details for its 35 billion
euro rescue package have been hammered out.
British Airways <BAY.L> sank 7 percent after it said there
was some risk to its full-year revenue forecasts as demand for
long-haul premium traffic had worsened. A profit warning from
airline services arm John Menzies <MNZS.L> added to the
nervousness.
The FTSEurofirst 300 has lost 28 percent so far in 2008,
hammered by the crisis in the credit market that has prompted
financial institutions to unveil massive asset writedowns,
forced Lehman Brothers <LEHMQ.PK> to file for bankruptcy
protection and triggered a number of government bailouts.
(Editing by Sue Thomas)
