European shares hit 6-wk highs; autos, TNT gain

Mon Aug 11, 2008 3:25am EDT

LONDON, Aug 11 (Reuters) - European stocks hit their highest in more than 6 weeks in early trade on Monday, led by oil shares which were aided by an uptick in crude on fighting between Russia and Georgia, and automakers, which rose on euro weakness.

At 0719 GMT, the pan-European FTSEurofirst 300 index was up 1 percent at 1,210.48 points, its highest level since June 26.

Dutch mail and logistics group TNT jumped 5.7 percent to top gainers in Europe after a source familiar with the talks said U.S. delivery company United Parcel Service was in talks to buy TNT.

Auto stocks gained as the euro fell further below $1.50, having suffered its biggest one-day drop since January 2001 on Friday.

BMW rose 3.4 percent, Daimler DIAGn.DE gained 2.7 percent, while Renault and Peugeot advanced around 2 percent.

Though oil gained $1.60 a barrel, it was still below $117, and a long way below record highs above $147 hit last month.

"The key elements of this equities rebound are the drop in both the euro and oil prices," said Marc Touati, economist at Global Equities, in Paris.

Banks were broadly higher, with UBS leading the way with a gain of 4.3 percent.

The mining sector was in focus after Kazakhmys raised its stake in rival Eurasian Natural Resource (ENRC) to above 25 percent and Xstrata looked to raise more than 5 billion pounds to forge ahead with a hostile bid for Lonmin.

Kazakhmys was up 2.3 percent, Eurasian down 0.8 percent, Xstrata up 1.1 percent and Lonmin flat. (Reporting by Sitaraman Shankar and Blaise Robinson)