UK leads European equity rally after Conservative win

* FTSE 100 up 1.7 pct, outperforms region

* UK Conservatives' victory seen as positive for equities

* Syngenta (Xetra: 580854 - news) rallies after rejecting Monsanto bid (Updates prices, expands)

By Francesco Canepa

LONDON, May 8 (Reuters) - UK shares led a rebound in European equity indexes on Friday after election results showed Prime Minister David Cameron's Conservatives were set to govern Britain for another five years.

Broader market sentiment was also supported by a return to calm in U.S and European government bonds after a recent selloff, with investors awaiting U.S. jobs data due later in the session.

At 1012 GMT, Britain's FTSE 100 was up 1.7 percent, outperforming the FTSEurofirst 300 index of pan-European shares, up 1.4 percent.

British bank Lloyds rose 6.3 percent as the threat of a Labour-proposed banking levy disappeared while utility Centrica (LSE: CNA.L - news) , which might have been hit by a tariff freeze under a Labour government, added 6.9 percent. British defence group Babcock gained 7.1 percent.

"As far as markets are concerned, it is good news," Stanhope Capital (Other OTC: CGHC - news) 's chief investment officer Jonathan Bell said.

"A conservative victory is preferable over a Labour-SNP coalition and that's why we see sterling and UK equities higher and the sectors that were under threat from a Labour policy, such as financials and utility (shares), are going to do well."

Investors were keeping a close eye on U.S. employment data due at 1230 GMT for a fresh indication of the state of the world's largest economy.

Meanwhile, agrochemicals firm Syngenta soared 18 percent after it rejected a $45 billion takeover offer from Monsanto, saying the offer was too low and did not fully take into account regulatory risks.

Nokia (Swiss: NOK1V.SW - news) rose 2.4 percent after taxi service Uber submitted a $3 billion bid for the Finnish firm's map business HERE, the New York Times reported.

The FTSEurofirst 300 index had fallen 6 percent from a 14-1/2 year peak hit in April as a rebound in oil prices raised prospects of an early U.S. interest rate hike at a time of patchy economic growth.

Euro zone government bonds had sold off sharply while the euro rebounded against the dollar, dulling the euro zone's export prospects.

Man Group (LSE: EMG.L - news) shares fell 2.5 percent due to concerns on the performance of some of its funds due to the recent bond market sell-off.

"There will be a bit of a relief rally (after the UK election) and then people will go back to focus on the global economy," Paul Sedgwick, head of investment at money manager Frank Investments.

"If bonds stabilise, I think equity markets will do well."

Holcim (Other OTC: HCMLF - news) investors backed a capital increase in a vote, paving the way for the Swiss cement maker's planned $40 billion merger with France's Lafarge (Paris: FR0000120537 - news) .

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 Tom Heneghan)