European shares lifted by rise in auto and mining stocks

* FTSEurofirst 300 up 1.5 pct, Euro STOXX 50 up 1.2 pct

* Traders hope for more stimulus measures in China

* Firmer metals prices boost mining stocks

* VW considering steps to prop up credit rating -sources

* Glencore (Xetra: A1JAGV - news) rallies after upbeat notes from Citi and Barclays (LSE: BARC.L - news)

By Sudip Kar-Gupta

LONDON, Oct (HKSE: 3366-OL.HK - news) 1 (Reuters) - European shares rose on Thursday as a rebound in mining stocks and gains in the automotive sector lifted the region's markets back up following the end of a bruising third quarter.

European stocks were also supported by gains overnight on Asian and U.S (Other OTC: UBGXF - news) . equity markets, with some traders viewing more weak Chinese data as a sign that Beijing may undertake further measures to bolster the country's economy.

However, shares in telecoms group Altice (Other OTC: ATSVF - news) fell by 3.3 percent after Altice announced a capital increase to help fund its takeover of Cablevision.

The pan-European FTSEurofirst 300 index rose 1.5 percent, while the euro zone's blue-chip Euro STOXX 50 index and Germany's DAX both gained 1.2 percent.

European markets have lost ground over the last few months, hit by a slowdown in China that led to the FTSEurofirst falling nearly 10 percent in the last quarter, while the DAX is some 20 percent below its record high set in April (LSE: 0N69.L - news) .

Activity in China's vast factory sector shrank again in September as demand softened at home and abroad, fueling fears the world's second-largest economy may be cooling more rapidly than expected just a few months ago.

However, metals prices rose as traders said the weak data from China - the world's biggest consumer of metals - would reinforce the need for Beijing to unveil more economic stimulus measures.

"It (Other OTC: ITGL - news) is still pretty gloomy with regards to China, but I think we're still in a 'Goldilocks' environment. We still have supportive monetary policy around the world," said Logic Investments' Harry Shann.

The stronger metals prices lifted mining stocks, while mining and trading giant Glencore, whose shares have been hit this week by concerns over its debt situation, rallied 6.9 percent following upbeat broker notes on Glencore (Amsterdam: GX8.AS - news) from Citigroup (NYSE: C - news) and Barclays.

Volkswagen (Other OTC: VLKAF - news) shares also rose 4.4 percent as sources told Reuters that its supervisory board is considering steps to prop up the carmaker's credit rating amid a scandal over its rigging of emissions tests.

This contributed to the STOXX Europe Automobiles index climbing 2.5 percent, while Fiat (Hanover: FIA1.HA - news) rose 4.3 percent as brokers expressed confidence over a planned stock market listing of Fiat's Ferrari brand.

Today's European research round-up (Editing by Tom Heneghan)