Europe stocks gain as banks, commods rise

* FTSEurofirst 300 index up 1.3 pct

* Banks, commoditiess gain

* Automobiles lower; Porsche falls

By Joanne Frearson

LONDON, June 19 (Reuters) - European shares were higher on Friday at midday, led by gains in banks and commodity stocks, as "triple witching" started to take place.

By 1031 GMT, the pan-European FTSEurofirst 300 .FTEU3 index of top shares was up 1.3 percent at 861.70 points.

The European benchmark index is up 33 percent from the lifetime low hit on March 9, as investors have become more confident on prospects for an economic recovery.

"It is a pretty quiet day today, it is all about triple witching. Everyone is waiting to see what happens with Volkswagen as Porsche options mature today. No one knows whether they will be rolled over or let expired which means VW could fall off a cliff," said Heino Ruland, strategist at Ruland Research.

Triple witching is the expiry of stock index futures, stock index options and single stock options.

Banks added the most points to the index. HSBC (HSBA.L), Barclays (BARC.L), Standard Chartered (STAN.L) and Banco Santander (SAN.MC) were up 1.7-3 percent.

The DJ Stoxx banking index .SX7P is up around 21 percent for the year, after falling about 64 percent last year.

Insurers were higher, boosted by a positive sector note from Deutsche Bank. The broker upgraded price targets for Aviva (AV.L) and Axa (AXAF.PA) which gained 5.6 percent and 0.9 percent, respectively.

Energy stocks were higher as crude CLc1 rose towards $72 a barrel. BG Group (BG.L), BP (BP.L), Royal Dutch Shell (RDSa.L) and Total (TOTF.PA) gained 1-4.1 percent.

AUTOMOBILE STOCKS IN THE DOLDRUMS

Miners also ticked up. Anglo American (AAL.L), Antofagasta (ANTO.L), BHP Billiton (BLT.L), Eurasian Natural Resources Corporation (ENRC.L), Rio Tinto (RIO.L) and Xstrata (XTA.L) were 0.5-3.9 percent higher.

Investors also stuck with defensive stocks with food producer Nestle (NESN.VX) up 1.9 percent, while drug maker AstraZeneca (AZN.L) gained 2.4 percent after UBS added the group to its UK "First XI" stock list.

There were few sectors trading in the red with auto stocks the main sector in the doldrums. Porsche (PSHG_p.DE) slipped 0.3 percent after it said pretax profit at its core sports car business declined on the back of a sharp drop in vehicle sales and revenue in the first nine months of its fiscal year. [ID:nLJ236264]

Volkswagen (VOWG.DE) was down 1.8 percent as investors waited to see what was happening with the Porsche (PSHG_p.DE) options.

U.S. shares rallied on Thursday, breaking a three-day losing streak, as data on the job market, regional manufacturing and an index of leading indicators revived hopes the recession-hit economy was stabilising.

"The Conference Board leading indicators flashed an end-of-recession signal," said Davy stockbrokers in a note. "It has never fired a false signal before and this time is unlikely to prove any different.

"The question now is pinpointing the exact month of the trough. For equity markets, the timing of that recession end is important."

Across Europe, the FTSE 100 .FTSE index was up 1.7 percent, Germany's DAX .GDAXI was 0.2 percent higher and France's CAC 40 .FCHI was up 1.1 percent.

U.S. stock index futures DJc1 SPc1 NDc1 also traded up, indicating a higher start on the Wall Street. (Additional reporting by Brian Gorman; Editing by Jon Loades-Carter)