European shares rise led by miners, cars and banks

* Miners, carmakers lift European stock markets

* Goldman earnings, SIV rescue support banks

* Central banks tone down rate hike expectations

By Peter Starck

FRANKFURT, June 17 (Reuters) - European stocks rose on Tuesday, led by Daimler (DAIGn.DE) after news that the German carmaker will resume share buybacks and on strength in miners such as Rio Tinto (RIO.L) amid takeover speculation.

Better than expected quarterly profits from Goldman Sachs (GS.N) and news that the U.S. investment bank has completed a long-awaited rescue of a $7 billion structured investment vehicle supported European banks, notably Barclays (BARC.L).

Stock markets also drew strength from remarks signalling that the U.S. Federal Reserve, the European Central Bank and the Bank of England were toning down expectations of aggressive monetary policy tightening to combat rising inflation.

The FTSEurofirst 300 .FTEU3 index of top European shares closed 0.5 percent higher at 1,268.90 points, wiping out the previous session's losses. The index is down 18.7 percent so far in 2008 but 5.8 percent above is mid-March year-low.

Investment strategists were divided on the outlook.

"There will be little upward pressure on equities in the dog days of summer, and I would expect us to end the year lower than where we are now," Seven Investment Management's Justin Urquhart Stewart said.

But Klaus Martini, global chief investment officer at Deutsche Bank's (DBKGn.DE) private asset management unit, saw scope for gains.

"There is potential in the stock markets once the financial crisis calms down and once we have more transparency on corporate earnings," he said, adding the DJ EuroSTOXX 50 index .STOXX50E could rise some 12.5 percent on a 12-month horizon.

"It's hard to say exactly when the financial sector crisis will be over but already now you can do some wonderful bottom-fishing," Martini said.

"We are in for quite a rebound in bank shares overall," he said, though he did not say which specific stocks he favoured.

Barclays rose 3.5 percent, HBOS HBOS.L was up 3.4 percent, Societe Generale (SOGN.PA) gained 3.2 percent and BNP Paribas (BNPP.PA) and Royal Bank of Scotland (RBS) (RBS.L) added 2.7 percent each.

Dresdner Kleinwort upgraded RBS to "add" and Barclays to "hold", citing those stocks' "substantial underperformance". Both banks, however, "still face earnings headwinds," Dresdner said in a research note on UK banks.

"We focus on provisions, and find that some banks already discount very negative scenarios ... We do not expect a return to the early 1990s in terms of bad debts, as the economic environment is fundamentally different," Dresdner said.

The DJ Stoxx European bank index .SX7P rose 0.9 percent.

SHARE BUYBACK

Autos .SXAP were the top sectoral performer with a gain of 2.5 percent. Daimler climbed 3.2 percent to 45.08 euros after unveiling plans to spend up to 6 billion euros ($9.31 billion) to repurchase 10 percent of its stock.

DZ Bank said the buyback "will help the sentiment especially after the weak share price performance in the past weeks," and saw scope for the stock reaching 48-50 euros in the short term.

A rise in the price of some base metals such as aluminium MAL3=LX and steady precious metals helped miners, which were also boosted by a newspaper report that China's state-owned aluminium producer Chinalco was keen to buy a range of global resource assets and may consider raising its stake in Rio Tinto.

Rio Tinto rose 3.5 percent and BHP Billiton (BLT.L), which has bid more than $180 billion for Rio Tinto, firmed 3.8 percent.

Shares in Dutch chip equipment maker ASM International ASMI.AC rose 9 percent after news that U.S. Applied Materials (AMAT.O) and private equity firm Francisco Partners have made an unsolicited bid worth up to $800 million for ASM's main business.

Swedish telecommunications equipment maker Ericsson (ERICb.ST) rallied 3 percent. Its mobile phone joint venture with Japan's Sony (6758.T), Sony Ericsson, forecast strong demand for the global handset industry in the second quarter and the second half of this year.

Irish drugmaker Elan Corp (ELN.I) rose 5.7 percent after it said an intermediate trial of a drug for Alzheimer's disease supported an earlier decision to start final Phase III trials.

Shares in Britain's biggest hotel and restaurant operator, Whitbread (WTB.L), rose 4.3 percent to 1,270 pence after saying like-for-like sales across its businesses rose 7 percent in the 13 weeks to May 29.

"The company derives a defensive element from the potential for down-trading within the hotel sector towards its budget Premier Inn brand," Killik & Co said in a note, launching a "tactical buy" recommendation on the stock with a price target of 1,500 pence.

Among the day's leading losers, Coca-Cola Hellenic HLB.AT fell 8.7 percent after UBS and Morgan Stanley slashed their price targets for the stock in the wake of the soft drink bottling company's lowered 2008 profit guidance. (Additional reporting by Sitaraman Shankar and Amanda Cooper in London)