European shares surge early after Citigroup rescue

* FTSEurofirst 300 .FTEU3 index rises 3.7 percent

* Most banks gain after Citigroup rescue

* Oils, miners also rise in broad market rally

By Brian Gorman

LONDON, Nov 24 (Reuters) - European shares rose sharply in early trade on Monday, with financials leading the surge following a rescue plan for banking giant Citigroup (C.N: Quote, Profile, Research, Stock Buzz), and after a late rally for U.S. stocks on Friday.

At 0930 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 3.7 percent at 788.91. The index lost 12 percent last week to close at its lowest in five and a half years and has lost 47.8 percent this year, hurt by the credit crisis and the prospect of recession.

Banco Santander (SAN.MC: Quote, Profile, Research, Stock Buzz), Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), Deutsche Bank DBGKn.DE, HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz), Lloyds (LLOY.L: Quote, Profile, Research, Stock Buzz) and UBS UBS.AG were up between 2.7 and 5.9 percent.

The U.S. government late on Sunday unveiled a $306 billion rescue package for Citigroup (TRV.F: Quote, Profile, Research, Stock Buzz) in the latest attempt to restore confidence in the ailing financial system.

European credit derivative indexes rallied sharply on Monday after the bailout plan.

"The US rally is obviously good for sentiment, and it's good that they have decided Citigroup is too big to fail, so on balance it's a positive but the bad news is that these are enormous figures. It makes people pause for thought," said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.

Bank of Ireland (BKIR.I: Quote, Profile, Research, Stock Buzz) was up 8 percent after press reports that an Irish-led consortium of private investment firms is seeking to buy into the company, and possibly Irish Life & Permanent (IPM.I: Quote, Profile, Research, Stock Buzz).

But UK-based lender Standard Chartered (STAN.L: Quote, Profile, Research, Stock Buzz) was 4.2 percent lower after announcing a 1.8 billion pound ($2.69 billion) rights issue that it said would strengthen its balance sheet and give it the flexibility to take advantage of opportunities in the current turbulent markets.

The move by the emerging markets-focused bank, which has dodged the massive losses from the credit crisis suffered by some of its competitors, came as analysts called for a capital cushion to withstand potential losses in Asia and the Middle East.

Across Europe, Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC-40 .FCHI were up between 3.1 and 4.3 percent.

The surge was across the board, with only one of the 38 industry groups in the FTSEurofirst 300 lower.

OILS, MINERS GAIN

Oils moved up, despite the crude price CLc1 slipping back below $50. Total (TOTF.PA: Quote, Profile, Research, Stock Buzz), ENI (ENI.MI: Quote, Profile, Research, Stock Buzz), BP (BP.L: Quote, Profile, Research, Stock Buzz) and Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) all rose between 2.2 and 3.8 percent.

Miners also gained, even as metals prices fell. Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz), Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz), BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz), Eurasian Natural Resources Corp. (ENRC.L: Quote, Profile, Research, Stock Buzz), Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz), Vedanta Resources (VED.L: Quote, Profile, Research, Stock Buzz) and Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) rose 4.2 to 5.9 percent.

French drugmaker Sanofi-Aventis (SASY.PA: Quote, Profile, Research, Stock Buzz) was up 7.7 percent after Morgan Stanley upgraded it to "overweight" from "equal-weight".

Anheuser-Busch Inbev (INTB.BR: Quote, Profile, Research, Stock Buzz) was 2.9 percent lower after launching a planned eight-for-five rights issue to part-fund the $52 billion purchase of U.S. Budweiser brewer Anheuser-Busch at a steep discount of 6.45 euros per share.

McAlinden said that companies such as Standard Chartered and InBev needing to raise money was a negative for the market. "It sucks money away from the market, towards a particular company," he said."

Later in the session, Britain's finance minister, Alistair Darling, will unveil his pre-budget report, expected to include a temporary cut in VAT to boost consumer spending power before Christmas.

The Sunday Times said Darling would scrap plans to increase corporation tax for small companies and exempt foreign dividends from tax in an effort to allay concerns that have led several big companies to shift their tax domicile to Ireland.

U.S. stocks stormed higher in a late rally on Friday to cap another volatile week as investors welcomed reports that President-elect Barack Obama has chosen his point person to combat the U.S. economic crisis, instilling confidence about the administration's ability to take action.

The Dow Jones industrial average .DJI jumped 6.5 percent. The Standard & Poor's 500 Index .SPX shot up 6.3 percent, and the Nasdaq Composite Index .IXIC climbed 5.2 percent.

The U.S. may gain further later today, when trading starts in a week shortened by the Thanksgiving holiday. Futures for the Dow Jones DJc1, S&P 500 SPc1 and Nasdaq NDc1 are up between 0.1 and 1 percent.