|Chennai||Rs. 28730.00 (1.13%)|
|Mumbai||Rs. 29740.00 (-0.13%)|
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* FTSEurofirst 300 up 1.1 pct, Euro STOXX 50 up 1.5 pct
* Euro zone factories see first growth in 2 years
* ECB says no rate hikes for "extended period"
* 86 pct of French blue-chips meet/beat forecasts -data
By Blaise Robinson
PARIS, Aug 1 (Reuters) - European shares rallied on Thursday, with a blue-chip benchmark surging to a two-month high following a batch of forecast-beating corporate results and upbeat manufacturing data from around the world.
Shares in Societe Generale jumped 10 percent after the French lender posted profits that more than doubled, while Lloyds surged 8.1 percent after beating forecasts and saying it was ahead of schedule on its goals for cost savings and capital strength.
The results sparked expectations of an earnings recovery in the sector, with Credit Agricole gaining 5.5 percent and UniCredit adding 3.4 percent. Both euro zone lenders are set to report results next week.
"Banking stocks across Europe are in a positive trend, and that was the main driver today for the market," FXCM analyst Vincent Ganne said.
"Investors are betting that the bottom of the economic cycle in Europe is now behind us, and if it's not the case, Mario Draghi has just reminded us that the ECB could still lower rates to boost growth."
The European Central Bank left interest rates at a record low of 0.5 percent on Thursday and said rates will remain there for some time and could yet fall further.
The euro zone's blue-chip Euro STOXX 50 index closed 1.5 percent higher at 2,808.64 points, a level not seen since late May and less than 2 percent below the index's year high.
Germany's DAX - home of some of Europe's biggest exporters - also strongly rallied, reversing a recent slide triggered by worries over the pace of Chinese economic growth.
The index gained 1.6 percent on Thursday, boosted by data showing China's official PMI for manufacturing surprisingly rose to 50.3 in July, suggesting a pick-up in activity.
U.S. data, meanwhile, showed output there growing at its fastest pace in two years, which pushed the S&P 500 above the 1,700 level for the first time. European factories snapped a two-year run of declining output, a sign that the euro zone recession may be near its end.
"Good macro, good earnings, M&A revival ... all the lights are turning 'green' for European equities," said David Thebault, head of quantitative sales trading at Global Equities.
"People have been reluctant to buy shares ahead of the earnings season, that's why we're seeing massive gains in many stocks after the companies beat forecasts."
So far in the earnings season, about 54 percent of STOXX Europe 600 companies have met or beaten analyst forecasts. A particularly strong batch of results came from France and Germany, where respectively 86 percent and 75 percent of blue-chips have met or beaten forecasts, according to Thomson Reuters StarMine data.