Robust factory data sparks Europe stock rally
* FTSEurofirst 300 up 1.8 pct, Euro STOXX 50 up 1.8 pct
* Robust Chinese, euro zone factory data confirms recovery
* Major investment banks upbeat on European stocks
* Buy Italy, Germany; sell Switzerland, Nomura says
PARIS, Sept 2 (Reuters) - European shares surged on Monday in a broad-based rally after Chinese and European factory data showed the global economic recovery is on track.
A batch of upbeat notes from top investment banks, including UBS's upgrade on continental European equities to 'overweight' from 'neutral', also lifted the mood of the market.
At 1349 GMT, the FTSEurofirst 300 index of top European shares was up 1.8 percent at 1,216.88 points, its biggest one-day rise in nearly two months.
The euro zone's blue-chip Euro STOXX 50 index was up 1.8 percent at 2,769.20 points.
Trading volumes were relatively low, however, in the absence of U.S. investors as Wall Street remained closed on Monday for a public holiday.
Mining shares featured among the top gainers, with Rio Tinto up 4.7 percent and Anglo American up 4 percent, lifted by data showing China's factory activity expanded at the fastest pace in more than a year last month, with a jump in new orders.
Bullish data also came from Europe, with British manufacturing accelerating again in August while euro zone factory activity expanded at its fastest pace in over two years.
"Data shows that things are finally moving in Europe. Even though economic growth is partially driven by rising public spending, it's creating the conditions for a pickup in corporate investment," said Patrick Legland, head of research at Societe Generale.
"We're positive on European equities, and we think that the improvement in the region's economic momentum has not really been priced in by investors yet."
Recent data from Societe Generale showed that it would still take $100 billion of net inflows into European equities to make up for the sharp outflows seen since 2007.
Around Europe, UK's FTSE 100 index was up 1.6 percent, Germany's DAX index up 1.7 percent, and France's CAC 40 up 1.6 percent.
UK telecom firm Vodafone gained 3.7 percent after saying it is in advanced talks with Verizon to sell its 45 percent stake in the Verizon Wireless joint venture, in what could be the world's third-largest deal of all time.
The news triggered a sharp rally in the telecom sector, with Telecom Italia surging 4.1 percent on speculation it could be the next to join the merger wave.
A raft of bullish notes from top investment banks including JPMorgan, Morgan Stanley, UBS and Nomura also lent support to European equities on Monday.
In their upgrade, UBS strategists cited regional macroeconomic data that "continues to surprise on the upside" and the fact that "the fiscal drag is dissipating."
For JPMorgan strategists, investors should "keep adding to Europe", saying the key driver is still the activity momentum, while Morgan Stanley recommended buying "European exposure".
Nomura strategists are also upbeat on European equities, favouring shares of domestic-oriented companies, with a 'buy' recommendation on German and Italian shares and a 'sell' recommendation on Swiss equities.
"Italy is the clear value proposition, and ranks cheapest of the major country indices on price/book and enterprise value to capital employed," Nomura strategists wrote.