European shares extend rally, led by commodities stocks

* FTSEurofirst 300 sharply up, still down 7 pct this month

* Energy, miners lead gains on strong commodity prices

* Philips (Amsterdam: PHIA.AS - news) underperforms after 3.3 billion disposal fails (Adds details, updates prices)

By Danilo Masoni

MILAN, Jan 22 (Reuters) - European equities rose sharply on Friday, adding to gains made in the previous session on ECB stimulus hints, with bouncing commodities prices boosting energy and mining stocks.

By 0908 GMT, the pan-European FTSEurofirst 300 was up 2.5 percent at 1,326.82 points. The index gained 2.1 percent on Thursday after European Central Bank head Mario Draghi said financial markets turmoil and concerns over China will prompt a March review of the bank's monetary policy.

In spite of the gains the FTSEurofirst 300 is down more than 7 percent since the start of the year and some investors remained cautious saying the rebound could be short-lived.

"It (Other OTC: ITGL - news) needs to be seen if and for how long merely comments and, at best, potential prospects of further ECB action will manage to push concerns about the Chinese economy and global growth in general out of the limelight," said City of London (LSE: CIN.L - news) Markets trader Markus Huber. "

"More action will be needed by other central banks like the BOJ and the PBoC in order to bring much needed long-term calm and optimism back into the markets," he added.

Oil stocks were the top sectoral gainer, up 4.4 percent, after a rally brought crude prices back above the key $30 mark, as cold weather as well as firmer financial markets gave traders reason to cash in on record short positions.

Shares (Berlin: DI6.BE - news) in oil majors Total (Swiss: FP.SW - news) , Royal Dutch Shell (Xetra: R6C1.DE - news) and Eni (NYSE: E - news) were up between 3 percent and 5 percent. Shares in Saipem (Other OTC: SAPMF - news) added 1.3 percent after the Italian oil services group priced a 3.5 billion euros cash call at a steep discount, as expected.

Miners ( .SXPP) were the also among the top gains, up 3.6 percent, as metal prices rose.

Italian luxury goods Tod's rose 5.2 percent after reporting a better-than-expected 7.4 percent rise in 2015 sales, boosted by a strong performance across its brands and favourable currency moves that helped offset weakness in Hong Kong.

Delhaize also rose, by 1.6 percent, on solid results. German software maker SAP (Amsterdam: AP6.AS - news) fell 0.6 percent giving up earlier gains as some brokers said its new 2017 target was no big surprise.

Philips fell 0.2 percent after the company said a $3.3 billion deal to sell its components business to a consortium of Asian buyers broke down over U.S (Other OTC: UBGXF - news) . national security objections.

"The termination of the Lumileds transaction came as a surprise after the rather confident tone at the Q3 results to solve the issues around the regulatory clearance," ING said in a note. (Reporting by Danilo Masoni; Editing by Toby Chopra)