European shares rise helped by Draghi; Italy banks rally

* FTSEurofirst 300 up 1.3 percent

* Monte Paschi leads Italy banks's strong rebound

* Pearson (Xetra: 858266 - news) and Logitech among top gainers

* Deutsche Bank (Other OTC: DBAGF - news) hit by capital concerns (Updates with market developments)

By Danilo Masoni and Atul Prakash

MILAN/LONDON Jan 21 (Reuters) - European shares rose on Thursday after slumping in the previous session, as a hint of more stimulus from ECB head Mario Draghi helped reassure investors following a turbulent start to the year.

Turmoil in financial markets and concerns over China and other emerging markets will prompt a March review of the European Central Bank's monetary policy, President Mario Draghi said on Thursday, holding out the prospect of further loosening.

"Draghi's words have helped calm down the market," Activtrades Chief Market Analyst Carlo Alberto De Casa said, noting how Italy was outperforming after heavy losses in banking shares led Italian stocks their lowest since 2014.

The pan-European FTSEurofirst 300 index rose 1.3 percent by 1505 GMT, but was off earlier highs, weighed down by a weaker opening at Wall Street.

The index fell 3.3 percent to its lowest level since October 2014 in the previous session. Milan's FTSE MIB index was up 2.7 percent while Germany's DAX was up 1.2 percent.

Italian banks rebounded from another sell-off on Wednesday triggered by bad loan and liquidity worries, with embattled lender Monte dei Paschi (Milan: BMPS.MI - news) soaring 39 percent as Prime Minister Matteo Renzi sought to reassure investors that the sector was solid despite its mountain of bad loans.

Monte Paschi has borne the brunt of a sell-off in Italian banking shares this year, losing more than half its market value since the end of 2015, with some investors seeing current values as a buying opportunity.

Shares (Berlin: DI6.BE - news) in Pearson surged 15 percent after the British education publisher announced plans to cut 10 percent of its workforce, cap its dividend and restructure after cutting earnings forecasts for 2015 and 2016.

"Whilst it is disappointing to see further restructuring costs and little, if any, improvement in underlying markets, we are broadly encouraged that Pearson has decided to redouble its efforts to meet external and internal challenges," said Roddy Davidson, analyst at Shore Capital.

"We believe the market will also be relieved by its decision to maintain dividends at 2015 year levels."

Swiss-American technology accessories maker Logitech also jumped 10 percent after its quarterly results beat analyst forecasts.

However, Deutsche Bank fell 5.2 percent after saying it expected a net loss of 6.7 billion euros for 2015 due to writedowns, litigation charges and restructuring costs.

The announcement by Germany's biggest bank has renewed concerns that it will now need to raise new capital to strengthen its finances. (Additional reporting by Sudip Kar-Gupta; Editing by Ralph Boulton)