* FTSEurofirst 300 index up 0.7 percent
* Commods, banks up ahead of GE, Bank of America results
* ENI up after gas discovery
By Joanne Frearson
LONDON, Oct 16 (Reuters) - European shares rose in early trade on Friday, with banks and energy stocks the biggest gainers on renewed optimism over growth prospects after strong results overnight from IBM and Google.
Investors also awaited earnings news from Bank of America and U.S. conglomerate General Electric, whose shares were up 1.3 percent and 1.9 percent, respectively, in Frankfurt.
By 0821 GMT, the FTSEurofirst 300 index of top European shares was up 0.7 percent at 1,024.19 points.
The FTSEurofirst 300 has surged 59 percent since reaching a record low in early March but is still down 37 percent from a multi-year peak reached in mid-2007.
"General Electric figures are seen better. But in the banking sector there is a division," said Justin Urquhart Stewart, director at Seven Investment Management.
"As far as the investment banking side has been concerned these have been very good figures, but not sure if they are going to be repeated and on the retail side it is going to get weaker," he said.
Banking shares were in the spotlight. Lloyds Banking Group gained 3.3 percent, supported by a Deutsche Bank upgrade and news it was to sell its loss-making Halifax estate agency business to LSL Property Services.
HSBC, Banco Santander and Credit Suisse were up 0.7 to 1.4 percent.
ENERGY STOCKS HIGHER
Energy shares added the most points to the index after oil gained ground for a seventh session and hit a one-year high above $78 a barrel. BG Group, BP, Royal Dutch Shell and Total gained 2 to 2.6 percent.
ENI was 2.1 percent higher after the company said it had made a large gas discovery off the coast of Venezuela.
Ericsson rose 1.4 percent after its Sony Ericsson joint venture with Japan's Sony posted a smaller than expected pretax loss in the third quarter, helped by cost cuts.
"What is positive about the report is the 4 percent sequential increase in the gross margin," WestLB analyst Thomas Langer said. "Make or break for (Sony Ericsson) will be in the first half of 2010."
On the downside, telecoms and drugmakers featured among the worst performers as investors moved away from defensive stocks.
Sanofi Aventis and GlaxoSmithKline were down 3.3 percent and 0.3 percent respectively, while Vodafone and Deutsche Telekom were 0.6 percent and 1.3 percent lower.
Volkswagen's preference shares fell 4.9 percent after the carmaker asked its shareholder to approve issuing up to 135 million new preferred shares to pave the way for taking a stake in Porsche AG.
Across Europe, the FTSE 100 index was up 0.7 percent, Germany's DAX was 0.6 percent higher and France's CAC 40 rose 0.4 percent.
(editing by John Stonestreet)