Europe shares end sharply higher; US data boosts

* FTSEurofirst 300 closes 1.6 pct higher

* Financials up; SocGen rises on retail banking, bid rumours

* U.S. data points to recovery; Fed statement awaited

By Brian Gorman

LONDON, Nov 4 (Reuters) - European shares rose sharply on Wednesday, with financials and automakers the major gainers, and with more evidence of economic recovery in the United States ahead of the Federal Reserve's statement at 1915 GMT.

The FTSEurofirst 300 <.FTEU3> index of top European shares rose 1.6 percent to close at 984.64 points, more than recouping the previous session's losses.

The benchmark index has gained more than 52 percent since hitting a record low in early March.

Banks added most to the index. Societe Generale gained 4.6 percent, boosted by a solid third-quarter performance at its French retail banking division and more bid speculation. [ID:nL3620732]

Barclays , Banco Santander , BNP Paribas , HSBC and UBS were up between 1.2 and 4.2 percent.

The Fed is expected to reaffirm its intention to keep U.S. interest rates at ultra-low levels for a long time to support the economy, even as signs of recovery accumulate. [ID:nN04432358]

Data from two sources helped boost sentiment on the U.S. economy. The U.S. service sector grew in October for the second consecutive month but at a slower pace than forecast. [ID:nN042167]

U.S. companies reduced jobs in October at the slowest pace in more than a year, suggesting some stabilisation in the labour market as the economy emerges from recession, a report showed.

U.S. private employers shed 203,000 jobs in October, fewer than a revised 227,000 jobs lost in September, a report by ADP Employer Services said. The September fall was originally reported at 254,000. [ID:nN04545735]

"Equities are in a sweet spot at the moment, said Jeremy Batstone-Carr, strategist at Charles Stanley. "Interest rates are low. Growth is apparently taking place, and investors think this is a good time to be in the riskier assets.

"But they are walking a narrow tightrope. One might argue that the gains today boil down to the two words 'extended period' in relation to the Fed's' continuation of its easing of policy."

Wall Street was higher around the time European bourses were closing. The Dow Jones <.DJI>, S&P 500 <.SPX> and Nasdaq Composite <.IXIC> were up between 1 and 1.3 percent.

Across Europe, the FTSE 100 <.FTSE> index ended 1.4 percent higher, Germany's DAX <.GDAXI> was up 1.7 percent and France's CAC 40 <.FCHI> rose 2.4 percent.

INSURERS GAIN

Consumer caution dented British insurer Aviva's nine months sales, but its shares closed 5.5 percent higher on the company's modestly positive outlook and strong capital buffer. [ID:nL4413629]

Zurich Financial rose 3 percent, ahead of results on Thursday. Prudential rose 4 percent. France's AXA rose 2 percent.

Auto shares were given a boost after Nissan Motors <7201.T> revised its annual forecast and U.S. car sales rose on Tuesday. [ID:nL496323] [ID:nN03519331]

Renault , which has a significant stake in Nissan rose 4.1 percent. Daimler , BMW and Peugeot rose 2.1 to 3.1 percent.

Oils gained as crude prices rose above $80.70 a barrel after a U.S. government report showed inventories had fallen. [ID:nSP538800]

Total and StatoilHydro rose 1.7 and 2.4 percent respectively despite both reporting third-quarter profit sharply down from a year earlier. [ID:nL489506]

Cairn Energy gained 5 percent after its India subsidiary reached a deal to supply crude oil to Reliance Industries [ID:nBMA006349ENI]

Miners were supported by gold prices hitting a record above $1,095 an ounce, as the dollar weakened, as well as higher prices for copper and other metals.

Anglo American , Antofagasta , BHP Billiton , Rio Tinto and Xstrata rose 2.8 to 5.9 percent.

Retailers performed well, with Next and Marks & Spencer up 5.6 percent and 6 percent respectively after reporting positive trading updates.

Shares in Irish financials rose after credit ratings agency Fitch downgraded the country's sovereign rating by two notches to "AA-", a move analysts said had been expected.

Bank of Ireland , which also posted a first-half loss on Wednesday, rose 24.6 percent. Allied Irish Bank rose 19.7 percent. (Additional reporting by Joanne Frearson; editing by Mike Nesbit)