* FTSEurofirst 300 up 2.1 percent, highest close in over a year
* Banks gain after JPMorgan results
* Commodities rise tracking crude, metals
* For Europe's sector performance, click on
By Joanne Frearson
LONDON, Oct 14 (Reuters) - European shares surged to their highest closing level in more than a year on Wednesday as a surge in quarterly profits at JPMorgan boosted sentiment, with banks and commodity stocks the biggest gainers.
The FTSEurofirst 300 index of top European shares closed up 2.1 percent at 1,016.24 points after earlier touching a high of 1,017.75 points.
The benchmark index is up 57 percent since reaching a lifetime low on March 9 and is up 22 percent for the year, but down 38 percent from its mid-2007 peak.
"We are going into a very positive earnings season. So far we have seen this, with Intel and JPMorgan. These are encouraging signs for the economy. It is not a time to desert equities" said David Buik, partner at BGC Partners in London.
Intel's quarterly outlook and results soared past expectations late Tuesday, fueling optimism over a tech sector recovery before the crucial holiday season.
Investor sentiment was also lifted after JPMorgan reported sharply higher third-quarter results, topping Wall Street expectations.
Banks added the most points to the European index. HSBC, Banco Santander, Barclays and UBS were up 2.7 to 6.6 percent.
Commodity stocks featured among the biggest performers on the index as crude rose 1.1 percent. BG Group, BP, Cairn Energy and Total gained 2.2 to 8.6 percent.
MINERS IN DEMAND
Miners were in demand as copper rose 1.7 percent. The sector was also given a boost as Rio Tinto raised its production guidance for iron ore this year by between 5 and 7.5 percent to 210 million to 215 million tonnes, after reporting a 12 percent jump in third-quarter output.
Rio Tinto was up 5.3 percent. Anglo American, Antofagasta, BHP Billiton, Eurasian Natural Resources and Xstrata rose 3.4 to 7.7 percent.
Chemical stocks were on the rise. German BASF, the world's largest chemical maker, gained 7.4 percent after it surprised markets with forecast-beating third-quarter results, some two weeks ahead of schedule.
"(This is) clearly a positive surprise, confirms our view that Q3 reporting for the chemical industry could be better than consensus so far," a trader said.
German engineering company Siemens advanced 5.2 percent with traders citing speculation that the company may hike its guidance. Siemens declined to comment.
Investor sentiment was also lifted after sales at U.S. retailers fell in September, but rose excluding motor vehicles for a second straight month in September, raising cautious optimism consumer spending could support the economic recovery.
On the downside, Diageo, the world's biggest spirits group, fell 2.1 percent after hitting an eight-week low. The company said underlying quaterly sales fell 6 percent.
Its French peer Pernod Ricard was 3.5 percent lower following the numbers and Exane analysts downgrade Pernod to "underperform" from "neutral".
Across Europe, the FTSE 100 index was up 2 percent, Germany's DAX gained 2.5 percent and France's CAC 40 was 2.1 percent higher.