* FTSEurofirst 300 rises 1.2 percent, reverses the week's losses
* Euro STOXX 50 up 1.5 percent, back above key retracement level
* Spain debt auction results reassure investors
* Auto stocks rise as GM's big IPO fuels hopes for sector
* For up-to-the-minute market news, click on
By Blaise Robinson
PARIS, Nov 18 (Reuters) - European stocks rallied on Thursday, turning positive on the week as hopes of a solution to Ireland's debt crisis and results from a Spanish debt auction soothed investors' fears over euro zone sovereign debt.
At 1205 GMT, the FTSEurofirst 300 index of top European shares was up 1.2 percent at 1,105.39 points, reversing most of the losses suffered on Tuesday and turning slightly positive on the week.
The Euro STOXX 50, the euro zone's blue-chip index, gained 1.5 percent to 2,845.61 points, moving back above a key Fibonacci level, the 38.2 percent retracement of the index's drop from a 2007 high to a 2009 low, seen as a positive technical signal.
The index's next resistance level looms at around 2,900 points, the index's six-month high reached last week.
Banking stocks featured among the biggest gainers, with Bank of Ireland up 3.8 percent, Societe Generale up 3.4 percent and Barclays up 2.1 percent.
"The sovereign debt crisis will continue to haunt markets for a while, but all in all, we haven't given up on equities. Most of the stars are aligned," said Franz Wenzel, strategist at AXA Investment Managers, in Paris.
"We see growth coming back, monetary policy staying loose for a longer period, and on top of that we're getting good earnings. You can add to that M&A activity which we think will be a major driver for stocks in the next couple of months."
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* Multimedia euro zone crisis page:
http://r.reuters.com/hus75h
* Ireland's bailout graphic:
http://r.reuters.com/wuv48p
* Euro zone struggles with debt graphic:
http://r.reuters.com/hyb65p
* Interactive timeline on euro zone debt crisis:
http://link.reuters.com/nyx95q
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On Thursday, Ireland's central bank chief said he expected the country to receive tens of billions of euros in loans from European partners and the IMF to help shore up its struggling banks and stabilise the country's economy.
Also helping the mood, Spain received healthy bids for its sale of long-term debt, selling a combined 3.6 billion euros in 10-year and 30-year bonds, although yields rose 50 basis points on both papers.
"The auction confirms there is still a good investment base for Spanish bonds ... There was a lot of focus with talk of contagion spreading from Ireland to Portugal and then even Spain," 4Cast analyst Jo Tomkins said.
Around Europe, both the UK's FTSE 100 index and Germany's DAX index were up 1.4 percent and France's CAC 40 was up 1.7 percent.
Shares of car makers rallied, with Europe's auto index gaining 2.4 percent as General Motors Co's successful initial public offering fuelled optimism over the auto sector's recovery.
Peugeot, Fiat, Renault, Volkswagen and BMW were up 2.6-3.4 percent.
(Additional reporting by London Government bonds desk; Graphics by Scott Barber and Vincent Flasseur; Editing by Erica Billingham)