* FTSEurofirst 300 up 1.2 pct, bounces from Friday's dip
* Rebound led by German blue-chips
* Investor expectations growing for ECB intervention-poll
(Updates with closing prices)
By Blaise Robinson
PARIS, Aug 18 European shares rallied on Monday
as the market was encouraged by diplomatic efforts at the
weekend to try and ease tension in Ukraine.
Russia's Foreign Ministry said on Monday a "certain progress"
was achieved during talks between Russia, Germany, France and
Ukraine in Berlin on Sunday, although there was no movement
towards a ceasefire between government and rebel forces in
At 1518 GMT, the FTSEurofirst 300 index of top
European shares closed up 1.2 percent at 1,339.35 points.
Germany's DAX rose 1.7 percent.
Equities were also bolstered by mounting investor hopes that
the European Central Bank will resort to asset purchases in the
coming year, with a Reuters poll of euro money market traders
putting expectations of this at 50 percent.
German blue-chips - considered the most vulnerable to the
tensions between the West and Russia - were among the top
gainers on Monday. Continental AG, BASF and
Siemens were up between 1.6 percent and 3.3 percent.
Autos stocks also brushed off the threat of possible
retaliatory sanctions from Russia against Western nations, which
according to Russian daily newspaper Vedomosti may include a ban
on the imports of cars. The STOXX Europe 600 autos index
rose 2 percent.
The pan-European index had lost 0.5 percent and Germany's
DAX had dropped 1.4 percent on Friday, when reports that
Ukrainian forces had partially destroyed a military column from
Russia in Ukraine deepened market fears the conflict was
"Friday's news spooked investors, but it turns out that
there was no escalation involving Russian forces over the
weekend and that rebel forces have actually been retreating,
which helps the market reverse losses," Saxo Bank trader Pierre
"Investors want to believe in this rebound that started
early last week after a 10 percent correction, so we're seeing
buyers on the dip."
Europe's corporate earnings recovery has increased dividend
payouts by the most in five years, data showed on Monday. Low
interest and a further rise in profits should keep payouts
There was some positive earnings news from Britain's biggest
customer-owned lender, Nationwide Building Society,
which more than doubled first-quarter profit.
The FTSEurofirst 300 had lost as much as 7.4 percent and
Germany's DAX as much as 11 percent between late June and early
August. The losses came amid fears that the Ukrainian conflict
and tensions between the West and Moscow could derail Europe's
fragile economic recovery and hit corporate results.
Stocks started to recover last week with the FTSEurofirst
gaining 1.4 percent over the week despite Friday's pull-back.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Editing by Robin Pomeroy)