Europe stocks bounce; led by banks and commodities

* FTSEurofirst 300 rises 1.8 percent

* Banks, miners gain; pharma shares fall

* Survey confirms euro zone businesses shrinking

By Brian Gorman

LONDON, Nov 21 (Reuters) - European shares rose in morning trade on Friday, led by banks and commodity stocks, recovering a part of the previous day's hefty losses and tracking overnight gains in Asia as banks climbed.

At 1003 GMT, the pan-European FTSEurofirst 300 index .FTEU3 was 1.8 percent higher at 794.80 points. But the index has lost more than 47 percent this year, hammered by a credit crisis and economic slowdown. The index fell 3.8 percent to its lowest close in five-and-a-half years on Thursday.

Some analysts said the worst may be over.

"The darkest hour is just before dawn," said Justin Urquhart Stewart, director at Seven Investment Management.

"Actions are being taken which are encouraging -- interest rates are being cut, the monetary system is being repaired, with LIBOR easing; banks are being supported.

"The actions being taken are the key difference between the 1930s and now," Urquhart Stewart said.

Among banks, Royal Bank of Scotland (RBS.L) added 4.4 percent, UBS (UBSN.VX) gained 2.7 percent and Credit Agricole (CAGR.PA) put on 2.6 percent.

Bank of Ireland (BKIR.L) was up 13.9 percent. A consortium is planning a 2.5 billion-euro to 3 billion-euro ($3.13-3.76 billion) bid for a stake in Bank of Ireland (BKIR.I) amid government plans for consolidation in the sector, the Irish Independent newspaper said on Friday.

Bank of Ireland was not immediately available for comment.

Barclays (BARC.L) rose 4.2 percent after one of the British bank's top investors said it would back its fundraising plan even though it does not like the structure of the controversial deal.

Legal & General Investment Management (LGIM), part of insurer Legal & General Plc (LGEN.L), said late on Thursday it would vote in favour of Barclays' plan to raise 7 billion pounds ($10.4 billion), including over 5 billion from Middle East investors. [nLK127711]

Banks had been under pressure in recent days, taking their cue from the U.S. market, where Citigroup (C.N) faces a crisis of confidence as investors question its survival prospects.

Citi shares fell more than 26 percent to a nearly 14-year low on Thursday despite a vote of confidence from the banking giant's largest individual investor, Saudi Prince Alwaleed bin Talal, who said he would raise his stake to 5 percent from less than 4 percent.

The second-largest U.S. bank by assets has been reeling on concerns that mounting losses from credit cards, mortgages and toxic debt could overwhelm its efforts to slash costs and increase deposits. The bank is considering sales of assets, or even the whole company, said the Wall Street Journal.

Its Frankfurt-listed shares (TRV.F) rose 6 percent on Friday.

MINERS GAIN

Miners were higher as gold and platinum prices rose. Anglo American (AAL.L), Antofagasta (ANTO.L), BHP Billiton (BLT.L), Eurasian Natural Resources Corp. (ENRC.L), Kazakhmys (KAZ.L), Lonmin (LMI.L), Rio Tinto (RIO.L), Vedanta Resources (VED.L) and Xstrata (XTA.L) all rose between 5.5 percent and 9.8 percent.

Oils gained, as crude prices CLc1 enjoyed a slight rebound, though they were still below $50 a barrel.

Total (TOTF.PA), BP (BP.L), Royal Dutch Shell (RDSa.L), Statoil (STL.OL) and BG (BG.L) gained between 1.1 percent and 6 percent.

Pharmaceutical companies, hurt less than the wider market in recent days due to their defensive qualities, were mostly lower. GlaxoSmithKline (GSK.L) and Novartis (NOVN.VX) were down 2.2 and 1.6 percent respectively.

Across Europe, Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC-40 .FCHI were up 1 percent to 1.1 percent.

But economic news continued to confirm a pattern of slowdown. Euro zone services and manufacturing business sank much deeper and faster than expected in November to record lows as consumer and business demand collapsed at home and abroad, a key survey showed on Friday.

The Markit Eurozone Purchasing Managers Index for services companies ranging from banks to restaurants fell to 43.3 in November from 45.8 the previous month, the lowest in the survey's 10-year history, and well below the 50.0 mark that divides growth from contraction.

Japan's Nikkei .N225 rose 2.7 percent, buoyed by short-covering on hopes of Wall Street gains.

Major U.S. stock indexes slid between 5.1 percent and 6.7 percent on Thursday as economic concerns sent investors fleeing from risk. (Additional reporting by Rebekah Curtis; Editing by Sharon Lindores)