Australia shares rise on optimism over U.S., European economies

* Australia share index up 0.7 pct

* Optimism about U.S., Euro economies

* Financials lead market (Adds analysis, quotes, stocks on the move)

SYDNEY/WELLINGTON, Oct 27 (Reuters) - Australian shares rose by mid-session on Monday, as investors shrugged off concerns about the U.S. Federal Reserve winding back its stimulus plan and strong momentum from Wall Street.

Financial sector stocks pulled the market higher ahead of a widely expected announcement from the Fed this week that it will end quantitative easing - a sign the world's largest economy is recovering.

A European Central Bank report suggesting Europe's top lenders have largely repaired their finances since the global financial crisis also injected optimism about the continent's economy after weeks of poor economic data.

The S&P/ASX 200 index was up 36.95 points or 0.7 percent at 5,448.3 by 1254 GMT, heading for its highest close since Sept. 15. The index has risen in nine of the past 10 sessions.

"There's a whiff of optimism around," said Lonsec senior client adviser Michael Heffernan.

"The fact that Europe seems to be forging a path ahead is injecting a bit of optimism where there wasn't any several weeks ago."

On Friday, the Dow Jones industrial average rose 127.51 points, or 0.76 percent, to 16,805.41, the S&P 500 gained 13.76 points, or 0.71 percent, to 1,964.58 and the Nasdaq Composite added 30.92 points, or 0.69 percent, to 4,483.72.

Each of Australia's "big four" banks posted gains of nearly one percent, led by Commonwealth Bank of Australia (Other OTC: CBAUF - news) which rose 0.94 percent to A$79.51.

The mining sector was marginally weaker following falls in key commodities prices over the weekend. Rio Tinto (Xetra: 855018 - news) slipped 0.4 percent to A$59.82 while BHP Billiton (NYSE: BBL - news) added 0.5 percent to A$33.90.

The healthcare sector helped lift the market after blood products maker CSL (Other OTC: CMXHF - news) said it would buy Novartis AG (Xetra: 904278 - news) 's global influenza vaccine business for $275 million, making it the world No.2 flu vaccine company. CSL shares were up 0.7 percent at A$76.21.

Elsewhere, telco Amcom Telecommunications jumped as much as 13 percent to A$2.10 after rival telco Vocus said it plans to buy 10 percent of the company with a view to a full takeover.

New Zealand's benchmark NZX 50 index was up 0.78 percent, or 41.00 points, at 5,333.83.

(Editing by Jacqueline Wong)