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* FTSEurofirst 300 index up 0.8 percent
* Financial stocks lead market rally
* Expectations that c.banks will act on Greek vote fallout
By Sudip Kar-Gupta
LONDON, June 15 (Reuters) - European shares rose on Friday as expectations that central banks would intervene to deal with the risk of a Greek exit from the euro zone led to a recovery in financial stocks, which have fallen sharply on worries over their exposure to Greece.
However, many traders remained wary ahead of the Greek election on June 17, which could determine the country's future within the euro zone currency bloc, and said the equities market rally could be a short-lived one.
The FTSEurofirst 300 index rose 0.8 percent to 991.96 points by 1030 GMT. Germany's DAX rose 1 percent while France's CAC-40 index advanced by 1.6 percent.
Volumes, however, remained relatively thin as many investors opted to stay on the sidelines ahead of Sunday's Greek vote. Volumes came in at 77 percent of the average 90-day volume for the FTSEurofirst index, and at around 50 percent for the DAX.
"The appetite for risk in this market is not high," said Toby Campbell Gray, head of trading and risk at Tavira Securities, adding that his firm had recently sold the Spanish IBEX, Italian FTSEMIB and DAX indexes.
Financial stocks rose sharply after officials from G20 nations told Reuters that central banks were ready to take steps to stabilise markets, if needed, by providing liquidity and preventing any credit squeeze after Sunday's Greek election.
The STOXX European banking index rose 1.5 percent, although the index remains down by around 2 percent since the start of 2012.
DECLINING EARNINGS MOMENTUM
Deutsche Bank said in a research note that European shares also faced the risk of lower earnings from the region's companies, adding that the STOXX European industrials sector and the travel sector looked particularly vulnerable in the current climate.
Securequity sales trader Jawaid Afsar said he would be tempted to sell off shares later on Friday, in order to minimise any hits to portfolios in case of any unforeseen outcomes from the Greek election.
"If you're already in the rally, you should use the rally to start closing out your positions to reduce the risk ahead of Sunday," he said.
However, ClairInvest fund manager Ion-Marc Valahu said he had bought the Italian FTSEMIB and Spanish IBEX indexes this week.
He said the possibility that authorities might inject new funds into the banking system to deal with Europe's debt crisis meant he would not take out too many "short" positions - namely trades that bet on a further fall in markets.
"I'm not excessively positive but I don't want to be too short going into this market," he said.