* 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
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.