French banks, oils lift Europe shares 1 pct

* FTSEurofirst 300 up 1 percent

* French banks, oils top gainers

* Volkswagen continues counter-market move, falls 10 pct

By Sitaraman Shankar

LONDON, Oct 21 (Reuters) - European shares rose early on Tuesday, extending their winning streak to a third day, as investors cheered details of a French government move to bolster banks and oil shares rose as crude stayed near $75 a barrel.

At 0834 GMT, the FTSEurofirst 300 index of top European shares was up 1 percent at 937.49 points, with banks and energy stocks the top gainers.

BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) jumped 7.8 percent, Societe Generale (SOGN.PA: Quote, Profile, Research, Stock Buzz) 9.9 percent and Credit Agricole (CAGR.PA: Quote, Profile, Research, Stock Buzz) 14.1 percent after France outlined plans to lend 10.5 billion euros to the country's top six banks before the year end.

Among oil stocks, heavyweights Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) and Total (TOTF.PA: Quote, Profile, Research, Stock Buzz) gained 2 percent.

Shares on Wall Street gained on Monday after Federal Reserve Chairman Ben Bernanke backed more government spending to help the economy, and Japanese stocks rose sharply on Tuesday.

"Bernanke's comments are being interpreted to mean that he wants these measures to additionally support steps taken already, and that this would prevent a U.S. recession becoming too entrenched," said UniCredit strategist Tammo Greetfeld in Munich.

UniCredit changed its stance on European equities to "overweight" from "underweight" last week, and Greetfeld said that he expected recent measures to address interbank and interest rate fears, adding that shares already priced in a recession.

Swiss drugmaker Roche (ROG.VX: Quote, Profile, Research, Stock Buzz) was a heavily weighted loser on the pan-European index, falling 2 percent after it posted a fall in nine-month sales.

Volatile Volkswagen (VOWG.DE: Quote, Profile, Research, Stock Buzz) shares fell 10 percent, adding to recent big falls after a series of gains against the market trend attributed by traders to a short squeeze.

British banks HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) and Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) fell 3.7 and 5.4 percent after sharp gains on Monday.

A YEAR TO FORGET

Despite gains on Friday and Monday, the FTSEurofirst 300 remains on track for its worst month since September 2002, as worries over the economy replaced fears of bank collapses once governments across the world moved to bail out lenders.

The index has fallen 11.9 percent in October and 38 percent so far this year, lifting its dividend yield to 5.5 percent, well above the 3.96 percent offered by 10-year European government bonds .

Tech stocks were weaker after U.S. chipmaker Texas Instruments (TXN.N: Quote, Profile, Research, Stock Buzz) issued a disappointing outlook.

Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz), Ericsson (ERICb.ST: Quote, Profile, Research, Stock Buzz) and Infineon (IFXGn.DE: Quote, Profile, Research, Stock Buzz) fell 0.7-2.5 percent.

Renewable Energy (REC.OL: Quote, Profile, Research, Stock Buzz) slid 8.5 percent after the Norwegian group posted a smaller-than-expected rise in core earnings for the third quarter.

The focus shifts to U.S. earnings later in the day, with drugmaker Pfizer (PFE.N: Quote, Profile, Research, Stock Buzz), diversified manufacturer 3M (MMM.N: Quote, Profile, Research, Stock Buzz) chemicals group DuPont (DD.N: Quote, Profile, Research, Stock Buzz) and computer maker Apple (AAPL.O: Quote, Profile, Research, Stock Buzz) among a clutch of companies due to report. (Editing by Quentin Bryar)