* FTSEurofirst 300 rises 0.8 percent
* London catches up with Monday rally on mainland Europe
* BP rises on Shell takeover report
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By Brian Gorman
LONDON, Jan 4 (Reuters) - European shares rose in early trade on Tuesday, tracking gains on Wall Street, following upbeat economic data, and with London shares catching up with gains on mainland Europe in the previous session.
At 0932 GMT, the FTSEurofirst 300 index of top European shares was up 0.8 percent at 1,141.69 points, after rising 1 percent in the previous session. Trading volume returned to more normal levels, with more than 24 percent of the 90-day average having traded, following the thin sessions over the holiday period. London shares traded for the first time in 2011, and were catching up to some extent with Monday's rally on mainland Europe. Britain's FTSE 100 was up 1.8 percent.
Data from the United States, Europe and China helped Wall Street reach new two-year highs.
"People are starting to recognise there is some improvement in the employment picture in the United States. You would expect to see some of the confidence of the PMI to be reflected in the non-farm payrolls (on Friday)," said Philip Isherwood, European equities strategist at Evolution Securities.
Oil heavyweight BP rose 4.2 percent, following a report that rival Shell has been mulling a bid for it.
Other energy companies gained as crude prices hovered near 27-month highs, helped by expectations that the weather will keep U.S. inventories low. BG Group, Cairn Energy and Tullow Oil rose between 1.4 and 2.3 percent. Copper hit yet another record high in London, and other metals rose, helped by positive manufacturing data from around the world. Antofagasta, Fresnillo, Kazakhmys and Xstrata rose between 1.8 and 5 percent. Across Europe, Germany's DAX and France's CAC40 rose 0.2 and 0.3 percent respectively.
GREEK BANKS FALL
Greece's fourth-largest lender Piraeus Bank fell 11.8 percent after saying it will issue new shares to raise 807 million euros ($1.06 billion) to boost its balance sheet and cope with the Greek debt crisis.
Other Greek banks to fall included Alpha Bank, down 2.8 percent.
However, others in the sector were higher. RBS rose 4 percent after Exane BNP Paribas upgraded it to "outperform", with the French broker saying a sharp sell-off induced by the bank's exposure to debt crisis-hit Ireland presents a buying opportunity.
British mortgage approvals rose unexpectedly in November to their highest level since July, but unsecured consumer lending suffered its biggest monthly fall since August, Bank of England figures showed on Tuesday.
Later, investors' attention will turn to U.S. economic data, such as factory orders.
The European stocks benchmark rose 7.3 percent in 2010, and is up more than 76 percent from its lifetime low of March 2009, with several major economies having emerged from recession, helped by stimulus from governments and central banks worldwide. (Editing by Hans Peters)