* FTSEurofirst 300 rises 1 percent on first trading day of year
* Autos among top gainers; Porsche jumps on US court ruling
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By Atul Prakash
LONDON, Jan 3 (Reuters) - European shares started the first trading session of the year on a strong footing on Monday after gaining more than 7 percent in 2010 as money managers got fresh allocations, with Porsche leading auto shares higher.
Porsche jumped 11 percent after a U.S. federal judge dismissed a lawsuit by 10 hedge fund groups accusing the German automaker of cornering the market in shares of Volkswagen AG.
The STOXX Europe 600 Automobile and Parts index surged 2.8 percent, while the FTSEurofirst 300 index of top European shares was up 1 percent at 1,132.86 points at 0846 GMT. Volumes were expected to be thin during the session as Britain's FTSE 100 was closed for a holiday.
"Sentiment is positive and that is mainly because of the seasonality. Money managers typically get some new inflows at the start of a year and they put them to work," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.
"I guess this positive mood will continue for the next couple of days, but after that markets will start to look at issues such as economic growth in the United States and inflation rates in China."
Weekend data showed China's factory inflation cooled in December as manufacturers expanded more slowly after a strong run in growth, reducing the need for the country's central bank to tighten monetary policy too far.
A decision by China to raise interest rates on Dec. 25 had sparked worries about global growth, with analysts expecting the country's central bank to raise rates twice more in the first half of 2011.
VOLATILITY TO CONTINUE
Analysts said that equity markets are expected to remain volatile in 2011 as issues such as the euro zone debt situation might resurface. Greece and Ireland received bailout packages of billions of euros to manage their debts.
Spain has come under increasing pressure from international debt markets on concerns it may be forced to follow Greece and Ireland and seek an EU/IMF bailout, but while bond yields have risen, demand for Spanish debt remains solid.
China's Vice Premier Li Keqiang wrote in an editorial in El Pais on Monday that Chinese officials have faith in Spain's financial system and will continue to take part in government debt auctions.
Among individual movers, Norway's Seadrill rose 1.8 percent after the company said it would acquire two ultra-deepwater semi-submersible drilling rigs. (Editing by Hans Peters)