* FTSEurofirst 300 up 1.1 pct, Euro STOXX 50 up 1.2 pct
* Rebound seen as technical after correction
* Banco Popolare up 8.1 pct after forecast-beating results
By Blaise Robinson
PARIS, Aug 11 European shares rose in early
trade on Monday, bouncing back from a sharp two-week slide and
tracking a rally on Wall Street, after investors deemed Moscow
was not about to send troops into Ukraine - a move which would
Late on Friday, Russia's Defence Ministry said it had ended
military exercises in southern Russia which the United States
had criticised as a "provocative" step, sparking a sharp rally
on Wall Street.
Germany's DAX outperformed on Monday, up 1.4
percent, with Daimler up 2.2 percent and Adidas
up 1.2 percent. German companies are seen as the most
vulnerable to tensions between the West and Russia because of
the strong economic links between the two nations.
The situation on the ground remains uncertain, though,
meaning any relief rally could be fragile.
A Ukrainian military spokesman said on Monday government
forces were preparing to recapture the city of Donetsk from
pro-Russian separatist rebels, while at the weekend U.S.
President Barack Obama and German Chancellor Angela Merkel
agreed any unauthorized Russian intervention in Ukraine, even
under purported 'humanitarian' auspices, would provoke
"Fears over the conflict between Ukraine and Russia have
receded for now, which helps the market recover some ground,"
said Arnaud Scarpaci, fund manager at Montaigne Capital, in
"The 10 percent correction in Europe has brought some nice
buying opportunities, and the market was clearly oversold on
Friday. But this is mostly a technical bounce which should last
just a few days,"
At 0800 GMT, the FTSEurofirst 300 index of top
European shares was up 1.1 percent at 1,320.08 points.
The benchmark index had lost as much as 7.4 percent since
mid-June, with the euro zone's blue-chip Euro STOXX 50
index dropping 10 percent over the same period.
Technical charts showed both indexes had slipped into
'oversold territory', with their relative strength index (RSI)
falling below 30.
Euro zone banking shares - recently hit by the bailout of
Portugal's Banco Espirito Santo - featured among the
top gainers on Monday, with Banco Popolare rising 8.3
percent after Italy's fourth biggest bank reported
stronger-than-expected quarterly results.
Shares in Austria's Raiffeisen Bank International,
which has a significant exposure to Russia, were up 3.6 percent.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Editing by Toby Chopra)