* FTSEurofirst 300 closes 1.8 percent higher
* U.S. GDP data boosts sentiment
* Financial stocks among top gainers
By Brian Gorman
LONDON, Oct 29 (Reuters) - European shares closed higher on Thursday after data showed the United States had emerged from recession.
The FTSEurofirst 300 index of top European shares rose 1.8 percent to close at 997.49 points, after hitting a three-week low of 974.50 points earlier in the session.
The European benchmark is up more than 54 percent from its lifetime low of March 9, as investors have become more confident on the prospects for economic recovery.
The United States is the latest major economy to come out of recession, joining others such as France and Germany.
"The GDP growth has taken an element of uncertainty out of the market," said Bob Parker, vice chairman of asset management at Credit Suisse. "It confirms that the recession in America is over and that is pulling cash back into the market."
"I don't think this is going to be the start of a major rally. There is a concern about what happens when central banks pursue exit strategies and take liquidity out of the market."
The U.S. economy grew in the third quarter for the first time in a year as consumer spending and investment in new home-building rebounded, unofficially ending the worst recession in 70 years.
The Commerce Department, in its first estimate of third-quarter gross domestic product, said the economy grew at a 3.5 percent annual rate, the fastest pace since the third quarter of 2007, and compared with market expectations for a 3.3 percent growth rate. surged 17.7 percent after tumbling for three consecutive sessions following ING's announced capital increase and the spin-off of its insurance business. The EU-imposed break-up and retrenchment of Dutch ING sparked fears that others could face tougher-than-expected sanctions in return for state aid. ING shares rose 7.9 percent.
Some of the world's leading banks warned that bad debts could rise further in Europe next year, overshadowing an improvement in underlying earnings.
Royal Bank of Scotland rose 9.5 percent.
Lloyds Banking Group ended the day 7.5 percent higher after it inched closer to plugging a capital gap of more than 20 billion pounds ($33 billion), boosting the British bank's shares on prospects a deal enabling it to stay out of a government-backed asset insurance scheme, could happen before the year end.
Banking index heavyweights to gain, following weakness in recent days, included Banco Santander, HSBC, and Societe Generale, which rose between 1.4 and 5.9 percent.
DEUTSCHE BANK GAINS
Results also helped boost banks. Deutsche Bank rose 5.6 percent after reporting a profit in all of its divisions, though provisions for credit losses more than doubled year-on-year to 544 million euros.
Standard Chartered, based in the UK but focused on Asia, rose 3.7 percent after saying that it was benefiting from growth across its businesses, but warning that the economic outlook was still fragile.
Miners got strength from higher metals prices. BHP Billiton , Anglo American, Antofagasta, Rio Tinto and Xstrata rose 2.8 to 7.4 percent.
The rise in U.S. GDP helped crude oil prices rise to more than $80, but energy shares were mixed.
Royal Dutch Shell and Eni warned of a slow recovery, highlighting weak energy demand and operational challenges, as profits slumped. Shell, Europe's largest oil company by market value, fell 2.9 percent. Eni was almost flat.
Swiss engineering group ABB AG fell 2.4 percent. It is still struggling to predict when its customers will start spending again after third-quarter orders slumped 21 percent.
Swiss drugs industry supplier Lonza Group Ltd slumped 25 percent after it said order cancellations and postponements forced it to cut earnings targets.
Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 rose between 1.1 and 1.7 percent.
Wall Street was higher as European bourses were closing. The Dow Jones, S&P 500 and Nasdaq Composite were up between 1.3 and 1.5 percent.
(Additional reporting by Atul Prakash; editing by Elaine Hardcastle