European shares close near 6-wk high; HSBC gains

* FTSEurofirst 300 index up 0.8 percent

* Banks gain; HSBC rebounds from falls in previous session

* L'Oreal up on Nestle stake reports

By Harpreet Bhal

LONDON, March 2 (Reuters) - European shares hit a near six-week closing high on Tuesday, with HSBC (HSBA.L) rebounding and miners supported by firm metals prices, offsetting falls in Prudential after it agreed to buy AIG's Asian insurance arm.

The pan-European FTSEurofirst 300 .FTEU3 index of top shares closed 0.8 percent higher at 1,027.29 points, hitting its highest closing level since January 21.

Banks were among the biggest gainers, with heavyweight HSBC up 2.7 percent, after sharp falls in the previous session following the release of its results.

Within the sector, Barclays (BARC.L), Societe Generale (SOGN.PA), BNP Paribas (BNPP.PA) and Deutsche Bank (DBKGn.DE) added 0.7 to 3.1 percent.

"The earnings results that we're seeing have been very good," said Mike Lenhoff, chief strategist at Brewin Dolphin.

"The recovery that's coming through globally is showing up in better revenues and there is a green light out there for equity markets because the Fed is not going to change interest rates for some time."

Greek banks .FTATBNK added 3.3 percent ahead of a meeting between German Chancellor Angela Merkel and the Greek Prime Minister on Friday, as confidence grows in financial markets that Athens might be nearing a deal with European Union governments to take more budget consolidation steps in return for some form of aid. [ID:nLDE6210RX]

"The issue concerning sovereign debt is still present but it looks as if there will be an eventual resolution to it and the markets are less hung up about it," Lenhoff said.

Greek Prime Minister George Papandreou has called a cabinet meeting for Wednesday to "take decisions about the economy". The announcement appeared to signal that Athens is poised to take new savings measures in the hopes of winning EU support.

Miners were higher, underpinned by metals prices which stayed in positive territory. Anglo American (AAL.L), Eurasian Natural Resources (ENRC.L), Kazakhmys (KAZ.L), BHP Billiton (BLT.L) and Xstrata (XTA.L) rose 1.8 to 2.9 percent.

Bucking the trend, Vedanta Resources (VED.L) shed 3.3 percent as the India-focused mining group launched a $775 million convertible bond issue on Tuesday, seeking to refinance debt at lower interest rates. [ID:nLDE6210Z2]

Among individual gainers, L'Oreal (OREP.PA) gained 2.7 percent after the Daily Telegraph reported that Swiss food group Nestle (NESN.VX) was rumoured to be in informal talks to buy Liliane Bettencourt's 31 percent stake in the French cosmetics group. Nestle was up 0.6 percent.

Kuehne & Nagel International (KNIN.VX) was among the biggest gainers, up 6.3 percent after announcing results, with brokers JPMorgan and Vontobel hiking the firm's target price while Deutsche Bank raised its recommendation to "buy" from "hold".

PRUDENTIAL PRESSURED

On the downside, Prudential (PRU.L) fell 8 percent, extending its decline for the second session. On Monday, the insurer said it would pay $35.5 billion for American International Group's (AIG.N) Asian life insurance arm, and would undertake a $21 billion rights issue. [ID:nNLDE6200C]

Yara International (YAR.OL) fell 4.4 percent after U.S. based fertilizer maker CF Industries Holdings Inc (CF.N) relaunched its hostile bid for Terra Industries Inc TRA.N, betting the higher price of $4.75 billion will help it break up Terra's planned takeover by Yara International. [ID:nN02142573]

Across Europe, the FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC 40 .FCHI were up between 1.1 and 1.45 percent

Gains on Wall Street pushed the Dow index .DJI into positive territory for 2010, a day after both the S&P 500 .SPX and Nasdaq .IXIC moved above the break-even mark for the year. (Editing by Rupert Winchester)