European shares surge on Greek debt deal, led higher by banks

* Euro STOXX 50 up 2 pct, FTSEurofirst 300 up 1.8 pct

* Euro zone's banking index rises 2.7 pct after Greek deal

* Mid-cap Alent (LSE: ALNT.L - news) surges 44 pct on M&A news (Adds detail, fresh prices)

By Atul Prakash and Alistair Smout

LONDON, July 13 (Reuters) - European shares surged on Monday after euro zone leaders reached an agreement to move forward with a bailout loan for Greece to avert bankruptcy, following all-night talks in Brussels.

European Commission President Jean-Claude Juncker said there would be no Greek exit from the euro currency union, adding that he was convinced that Greek government and the Greek parliament would be able to pass all the decisions agreed at the summit.

While the Greek benchmark Athens Stock Exchange has been closed since June 26, U.S. listed Greek equity assets surged by over 10 percent in pre-market trade.

"For the markets, it's clearly positive that there is an agreement among the European member states and that there is an atmosphere of co-operation," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, said.

"Still, there is a bit of execution risk which may haunt us in terms of volatility."

The euro zone's blue-chip Euro STOXX 50 index hit a two-week high and was up 2 percent by 0943 GMT. It is up over 9 percent since last Tuesday's close.

The pan-European FTSEurofirst 300 index rose 1.8 percent to 1,570.10 points. Germany's DAX, France's CAC and Britain's FTSE 100 rose 0.7 to 2.2 percent.

The euro zone's banking index advanced 2.7 percent, helped by a 2.6 to 3.5 percent rise in shares of Societe Generale, Credit Agricole and UniCredit (Milan: UCG.MI - news) .

The region's volatility index, a crude indicator of investor concern, dropped 3.6 points to hit a two-week low.

Ronny Claeys, senior strategist at KBC Asset Management, said that in the long run, investors will try to find answers to questions such as whether the deal Athens has agreed with its European peers fundamentally resolves the issue of Greece's debt burden.

Shares (Frankfurt: DI6.F - news) in mid-cap Alent spiked 44 percent after U.S. chemicals maker Platform Specialty Products Corp said it would buy the British company for about 1.35 billion pounds ($2.09 billion) in cash to expand its portfolio and save costs.

Among fallers, International Personal Finance (LSE: IPF.L - news) dropped 14 percent, the biggest drop on the STOXX Europe , after a proposed law change in Poland that may hit the firm's results.

Europe bourses in 2015: http://link.reuters.com/pap87v

Asset performance in 2015: http://link.reuters.com/gap87v

Today's European research round-up (Editing by Toby Chopra)