European shares rise on easy monetary backdrop, France outperforms

(Adds closing prices)

* Glencore (Xetra: A1JAGV - news) , Arcelor lift miners; VW up after hitting 5-yr

low

* France outperforms as economic data beat expectations

* K+S (Other OTC: UBGXF - news) wipes out one-quarter of value as Potash withdraws bid

* Lisbon shares higher after Portuguese election

By Danilo Masoni

MILAN, Oct (HKSE: 3366-OL.HK - news) 5 (Reuters) - European shares rose sharply on

Monday as weak data in Europe and elsewhere reinforced

expectations the broad monetary policy backdrop will remain

equity-friendly, with Glencore and ArcelorMittal (Other OTC: AMSYF - news) lifting the

mining sector.

The pan-European FTSEurofirst 300 index ended up 3

percent and the euro zone's blue-chip Euro STOXX 50

climbed 3.3 percent. Both had fallen on Friday before Wall

Street rebounded to end in the black.

Euro zone business activity grew at its weakest pace in four

months during September, surveys showed on Monday.

"Data today is moderately negative for equities .... but

their impact is practically neutral because of growing

expectations that easing monetary policies in various countries

will continue or be expanded," said Marco Vailati, head of

research at Italy's Cassa Lombarda. He added retail sales were

positive as they confirmed Europe's economy was growing.

U.S. stocks rose on Monday, with the S&P 500 up for the

fifth day, after last week's disappointing jobs report hardened

views that the Federal Reserve won't raise interest rates this

year.

France's CAC outpaced the rest of Europe with a gain

of 3.5 percent following a report showing services activity

accelerated in September more than previously thought, a sign

that the euro zone's second-biggest economy finished the third

quarter on a firm footing.

"The economic data in France was today's surprise," said

Andrea Cuturi, chief investment officer at asset manager

Anthilia Capital. "Data elsewhere in Europe was not particularly

exciting. Signs of an economic acceleration in the euro zone are

there, but full of traps, from China to emerging markets and

local politics."

Mining and trading giant Glencore extended its

rebound from a sell-off a week ago, rising 21.1 percent on

Monday after a surge in its Hong Kong-listed shares.

Some traders said Glencore was buoyed by talk it might sell

some of its agricultural assets to cut its debt.

"Sentiment is improving towards Glencore on the signs that

it may be able to sell some of its assets," said Thames Capital

Markets trader Nav Banwait.

Gains by steelmaker ArcelorMittal also

helped mining stocks. It (Other OTC: ITGL - news) rose 8.7 percent after Citigroup (NYSE: C - news) raised

its rating on the stock to "buy" from "sell".

Volkswagen (Other OTC: VLKAF - news) , the car maker caught in a scandal

over rigged emissions tests, rose 1.3 percent. The stock earlier

fell as much as 6.5 percent to touch a five-year low, while its

credit default spreads jumped.

German potash producer K+S slumped 24.7 percent

after Potash Corp withdrew a bid.

Lisbon's benchmark PSI (Taiwan OTC: 8028.TWO - news) -20 index rose 3.5 percent

after Portugal's centre-right government won Sunday's election,

albeit without securing an outright majority.

European stocks remain below their 2015 peaks, reached

around April (LSE: 0N69.L - news) , having been pulled down in the third quarter by

concerns that China's economy was slowing.

According to data from Sentix on Monday, sentiment in the

euro zone deteriorated further in October as investors, rattled

by a slowdown in emerging markets, pared back their expectations

for the economy.

Today's European research round-up

(Additional reporting by Sudip Kar-Gupta in London; Editing by

Mark Trevelyan)