European shares set for first weekly rise of 2016, buoyed by oil

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

* Energy, miners lead gains on strong commodity prices

* Tod's rises after strong sales (Adds quote, detail, recasts)

By Alistair Smout and Danilo Masoni

LONDON/MILAN, Jan 22 (Reuters) - European equities rallied sharply on Friday and were set for thir first weekly rise this year, with higher commodity shares helping to add to gains from the previous session after stimulus hints from the ECB.

The pan-European FTSEurofirst 300 was up 3 percent at 1,332.67 points by 1216 GMT, up 2.8 percent for the week, the first weekly rise of 2016 and the biggest gain on a weekly basis since November.

The index extended a rally from the previous session, when it gained 2.1 percent after European Central Bank head Mario Draghi said financial markets turmoil and concerns over China would prompt a review in March of the bank's monetary policy.

On Friday, the oil sector led gainers, up 5.4 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.

Oil was still set for its biggest January fall in 25 years, which has seen the sector hit its lowest level since 2003 this week.

"Markets have seen a dramatic shift in sentiment in the space of a few days," said Jasper Lawler, market analyst at CMC Markets, adding that recent volatility in oil prices would keep equity investors nervous.

"The rally in stocks (on Friday) is more about the oil price than hopes of stimulus from the ECB. That puts it on shaky ground."

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 4 percent and 5.6 percent.

Miners were the also among the top gainers, up 3.1 percent, as metal prices rose.

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.

"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," said City of London Markets trader Markus Huber, referring to Japan and China.

Italian luxury goods Tod's rose 4.7 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 2.5 percent, on solid results. German software maker SAP (Amsterdam: AP6.AS - news) was flat, giving up earlier gains as some brokers said its new 2017 target was no big surprise.

(Reporting by Danilo Masoni; Editing by Toby Chopra)