Banks, Spanish stocks lead Europe shares up 1 pct

                                
 By Sitaraman Shankar
                                
 LONDON, May 2 (Reuters) - European shares got off to a
strong start on Friday, led by banks and Spanish stocks and in
step with a global equities rally as the dollar rose and oil
eased.
                                
 At 0841 GMT, the FTSEurofirst 300 <.FTEU3> was up nearly 1
percent at 1,351.75 points. The index rose 6 percent in April to
record its best month since late 2003 but is still 17 percent
off a 6-1/2 year peak hit in July last year.
                                
 Banks were broadly stronger, with Royal Bank of Scotland
<RBS.L>, UniCredit <CRDI.MI>, BNP Paribas <BNPP.PA>, Deutsche
Bank <DBKGn.DE> and UBS <UBSN.VX> up 1 to 3.9 percent.
                                
 Spanish stocks with big exposure to Brazil jumped after
Standard & Poor's upgraded Brazil to investment grade.
                                
 Banco Santander <SAN.MC> climbed 3.8 percent and Telefonica
<TEF.MC> gained 2.2 percent to be the top two points
contributors to the FTSEurofirst 300.
                                
 In other sectors, top gainers included miner Rio Tinto
<RIO.L>, which rose 1.5 percent after an Australian newspaper
cited Rio Chairman Paul Skinner as saying a break-up of his
company was an option to extract the best return for
shareholders.
                                
 U.S. stocks rose sharply overnight and Japan hit its highest
close in nearly four months amid growing optimism about the U.S.
economy.
                                
 But macro data continued to be mixed, with a survey showing
the pace of growth in the euro zone's manufacturing industry
fell to a near three-year low in April.
                                
 Analysts said they expected trading to stay volatile.
                                
 "We continue to expect the market to trade in a 'fat and
flat' range over the next few months, characterised by
relatively low aggregate return, but high volatility and sector
rotation," Goldman Sachs said in a note.
                                
 The focus shifts later to non-farm payroll data out of the
United States, which is expected to show 80,000 jobs were lost
in April, in line with the figure for March.
                                
 The U.S. Federal Reserve has cut interest rates by 225 basis
points so far this year, with the latest 25 basis-point cut
coming on Wednesday.
                                
 Across Europe, Britain's FTSE 100 <.FTSE> was up 0.6
percent, Germany's DAX <.GDAXI> rose 1 percent and France's CAC
<.FCHI> gained 0.7 percent.
                                
 German and French shares resumed trade after a break on
Thursday for Labour Day.
                                
 
                                
 OIL FALL LIFTS AIRLINES
                                
 Oil fell for the fourth session in a row, taken lower by a
firm dollar and easing supply concerns in Nigeria. Crude <CLc1>
traded slightly lower at $112.44 a barrel.
                                
 This pressured heavyweight oil stocks BP <BP.L> and Royal
Dutch Shell <RDSa.L>, which traded flat to slightly lower, and
Total <TOTF.PA>, which lost 0.7 percent.
                                
 But airlines gained, with Air France-KLM <AIRF.PA> rising
5.3 percent. Ryanair <RYA.L> jumped 6.4 percent, Lufthansa
<LHAG.DE> rose 3.6 percent and British Airways <BAY.L> gained
2.9 percent.
                                
 Swedish telecoms equipment maker Ericsson <ERICb.ST> fell 5
percent with some analysts concerned that its first-quarter
results announced last week owed more than expected to
intellectual property sales rather than the underlying business.
 (Editing by Quentin Bryar)