* FTSEurofirst 300 up 1.3 pct, above 1,000 after 11 months
* Financial stocks top gainers, Natixis up 8.5 percent
* For up-to-the-minute market news, click on
By Atul Prakash
LONDON, Sept 16 (Reuters) - European shares raced higher on Wednesday, with a key index hitting the 1,000 mark for the first time in 11 months, on growing optimism the worst recession since the Great Depression of the 1930s was probably over.
Encouraging macro economic data and positive comments from U.S. Federal Reserve chief Ben Bernanke this week, a year after the Lehman Brothers collapse, supported hopes that recovery from the worst downturn in decades was advancing.
At 1120 GMT, the FTSEurofirst 300 index of top European shares was up 1.3 percent at 1,004.84 points after hitting a high of 1,005.73, the highest since early October. It has gained in eighth sessions out of nine.
The index, which slumped 45 percent last year due to the global credit crisis, is up 20 percent this year and has surged 56 percent since hitting a record low in March. But the index is still down about 14 percent from its level a year ago, just before the bankruptcy of Lehman Brothers.
"Momentum is great. The market is trading higher because of Bernanke's comments and much better than expected economic news," said Koen De Leus, economist at KBC Securities.
"You still have some investors who didn't want to get into the market, but now are obliged to enter. You can't say to your clients that we have a jump of 60 percent and I missed all the rally," he said.
Financial stocks were the biggest beneficiary of the positive market sentiment, with Standard Chartered, HSBC, Barclays, BNP Paribas, Societe Generale, Credit Agricole and Natixis rising 1.7-8.5 percent.
Lloyds Banking Group rose 3.9 percent in line with the broader market sentiment. The London Times reported that the European Commission may force Lloyds to sell all or part of its key Halifax subsidiary in compensation for the billions of pounds of state aid the group has received.
Lloyds would not comment.
Investors trained their sights on the equities after U.S. data showed retail sales climbed 2.7 percent in August after declining 0.2 percent in July. It was the biggest monthly advance since January 2006 and well above market expectations.
Bernanke's comments that the recession was likely over also lifted spitits, but he cautioned the recovery would be slow and it would take time to create jobs..
RISK APPETITE RISES
The optimism saw fresh cash flood to stock markets. The dollar however fell to a one-year low against a currency basket as investors shifted to riskier assets.
The VDAX-NEW volatility index, was down 2.1 percent. The lower the volatility index, which is based on sell and buy options on Frankfurt's top-30 stocks, the higher is investors' appetite for risky assets, such as cyclical stocks.
"Another day in this brilliant bull market. The news around the world has been pretty good again in the last 24 hours," said Jim Wood Smith, head of research at Williams de Broe.
Retailers were also in demand after figures showed tight management of costs and stocks and better than expected summer sales helped two of Europe's top fashion retailers beat first-half profit forecasts.
Inditex, owner of the Zara chain and Europe's biggest clothing retailer, rose 4.3 percent after reporting a shallower than expected 7.6 percent fall in net profit.
Next, Britain's second-largest fashion chain, was up 5.2 percent after posting a 6.9 percent rise in first-half pretax profit and raising full-year guidance.
DSG International, Home Retail. Marks & Spencer and Debenhams were up 0.6-3.9 percent.
Miners got strength from higher metals prices. BHP Billiton , Anglo American, Antofagasta, Rio Tinto, Xstrata and Eurasian Natural Resources rose 1.4-4.2 percent.
French oil major Total rose 0.6 percent after it said it would grow output next year and that costs were falling sharply, enabling it to afford its dividend.
Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC 40 rose 0.9-1.4 percent. (Additional reporting by Joanne Frearson; Editing by Dan Lalor)