European shares close firmer; banks, oils rise

* FTSEurofirst 300 index up 0.5 pct

* Banking stocks, oils rise

* London markets closed, volumes low

By Joanne Frearson

LONDON, Dec 28 (Reuters) - European shares closed higher on Monday for the fifth consecutive session as banking and oil stocks rose in low volumes with London markets shut until Tuesday.

The pan-European FTSEurofirst 300 .FTEU3 index closed up 0.5 percent at 1,043.93 points.

The index has rallied nearly 62 percent since hitting a trough in early March, and is up 25 percent this year, on track for its best yearly gains since 1999. Last year, the index tumbled 45 percent.

Banks were among the top gainers on the index. UBS (UBSN.VX), Banco Santander (SAN.MC), BNP Paribas (BNPP.PA) and Societe Generale (SOGN.PA) were up 0.8 to 1.4 percent.

Energy stocks were also in demand as crude CLc1 gained 1.2 percent. Total (TOTF.PA), Galp Energia (GALP.LS) and Repsol (REP.MC) were 0.3 to 1 percent higher.

Airline shares were mixed, with Air France-KLM (AIRF.PA) up 0.4 percent and Lufthansa (LHAG.DE) down 0.2 percent. On Saturday a Nigerian was charged with trying to blow up a plane over the United States. [ID:nN28153666]

U.S. airline stocks fell on concerns over tightened airline security after the event. Northwest Airlines (DAL.N), UAL Corp UAUA.O, parent of United Airlines, and US Airways Group (LCC.N) were down 2.8 to 4.7 percent.

SIEMENS UP

Siemens (SIEGn.DE) gained 1.8 percent. The U.S.-based transport arm of the company said on Wednesday it had ramped up production to feed growing demand for urban light-rail systems and also had its eyes on a nascent U.S. push for high-speed rail. [ID:nN23158661]

"We certainly believe the rally can be sustained if you look out into 2010. We can be assured that we are looking at a V-shaped rally in terms of corporate profitability," said Henk Potts, equity strategist at Barclays Stockbrokers.

"Equities look attractive in a year which interest rates remain low. Despite the rally this year, valuations still look undemanding," he said, adding he expected developed markets to post a 10 percent return next year.

Across Europe, Germany's DAX .GDAXI was up 0.8 percent and France's CAC 40 .FCHI gained 0.9 percent. Volumes on the DAX were about 34 percent of its 90-day daily average and about 32 percent for the CAC 40. (Additional reporting by Dominic Lau; Editing by Ruth Pitchford)