European shares record biggest gain in 3 months

* FTSEurofirst 300 rises 2.9 pct, biggest gain in 3 months

* Rebound in Chinese manufacturing sector boosts miners

* U.S. ISM data further boosts sentiment

* M&A talk lifts Cable & Wireless Worldwide, TUI Travel

By Brian Gorman

LONDON, Sept 1 (Reuters) - European shares registered their biggest daily gain in more than three months on Wednesday, on strong manufacturing data from the United States and China, the world's two biggest economies.

The FTSEurofirst 300 <.FTEU3> index of leading European shares rose 2.9 percent to close at 1,055.69 points, its biggest one-day percentage rise since May 27. The index lost 1.7 percent last month, but Wednesday's rise took it back into positive territory for 2010.

"The main reason is the data from China, and that was needed, because China is one of the few pockets of strength left," said Heino Ruland, strategist at Ruland Research in Frankfurt.

"Equities are not expensive, so any sign of a resumption of stronger growth, and people will look at purchasing equities as opposed to bonds."

Miners were the standout gainers, as the price of copper and other metals gained on a better outlook. A weaker dollar also helped. Antofagasta <KAZ.L>, Kazakhmys <KAZ.L>, Rio Tinto <RIO.L> and Xstrata <XTA.L> rose between 6 and 6.9 percent.

Energy companies gained as crude prices <CLc1> headed higher, despite a rise in oil stockpiles. Total <TOTF.PA>, BP <BP.L> and Royal Dutch Shell <RDSa.L> rose between 2.1 and 3.5 percent.

HSBC's China Purchasing Managers' Index rose in August to a three-month high of 51.9 from 49.4 in July, pointing to a moderate improvement in the manufacturing sector as both output and new orders resumed growth. [ID:nBJL002061]

The U.S. manufacturing sector grew faster than expected in August, chalking up a 13th straight month of expansion, helping to calm fears that economic growth was stagnating. [ID:nN01115648]

In a broad market rally, the heavyweight banking sector also gave the index a boost. French banks BNP Paribas <BNPP.PA> and Societe Generale <SOGN.PA> rose 5.9 and 5.6 percent, respectively, bouncing from recent weakness. Standard Chartered <STAN.L>, which will be promoted to the Stoxx Europe 50 <.STOXX50> this month, rose 4.1 percent.

But other reports on Wednesday showing private employers unexpectedly cut jobs last month and construction spending tumbled to a 10-year low in July served as a reminder that recovery from the worst recession since the 1930s would trace a difficult path.

Across Europe, Britain's FTSE 100 <.FTSE> and Germany's DAX <.GDAXI> both ended the day 2.7 percent higher; France's CAC 40 <.FCHI> rose 3.8 percent.

Wall Street was higher around the time European bourses were closing. The Dow Jones <.DJI>, S&P 500 <.SPX> and Nasdaq Composite <.IXIC> were up between 2.4 and 2.8 percent.

M&A BOOSTS

Merger and acquisition talk, buoyed by several deals in the pipeline, including BHP's hostile bid for Canadian group Potash Corp <POT.TO>, also lifted the market.

Cable & Wireless Worldwide <CWP.L> surged 7.7 percent, with traders citing talk of bid interest from U.S. rival AT&T <T.N>. The British telecoms company would not comment.

TUI Travel <TT.L>, Europe's largest travel company, climbed 7.5 percent after the Financial Times Deutschland reported majority shareholder TUI AG <TUIGn.DE> was considering buying the shares in the London-listed company it does not already own.

German group TUI AG gained 5.1 percent.

Vivendi <VIV.PA>, Europe's largest telecom and entertainment group, rose 5 percent after strong results, helping the media sector index <.SXMP> to a gain of 3 percent.

Ruland added: "In the U.S. ISM, the sub-index dealing with the intention to employ was especially strong.

"After the performance of equity markets in August, any really bad scenario has already been priced in. But we're still looking to the labour market report on Friday, and the rally we have seen here could be reversed." (Editing by Will Waterman)