* FTSEurofirst 300 up 1.3 percent, hits highest since Sept 08
* Commodity issues rise on surging crude, metals prices
* U.S. tax cuts seen helping consumer spending
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By Harpreet Bhal
LONDON, Dec 7 (Reuters) - European shares hit a 26-month high on Tuesday, with commodity issues gaining on strong crude and metals prices and as a deal to extend U.S. tax cuts helped lift confidence in the economy.
By 1224 GMT, the pan-European FTSEurofirst 300 index of top shares was up 1.3 percent at 1,119.31 points, having earlier hit its highest intraday level since late September 2008.
Mining shares were among the biggest gainers, as copper prices surged to a record high on an improving demand outlook and tight supply. Eurasian Natural Resources, Kazakhmys and Xstrata rose 3.2 to 4.1 percent.
A rally in crude prices to above $90 a barrel helped energy firms push higher, as the cold snap in Europe and the United States lifted fuel demand. Oil majors BPL, Total and ENI added 1.5 to 2.2 percent.
U.S. President Barack Obama on Monday unveiled a compromise deal to extend all Bush-era tax cuts for two years, not just for the middle class, but also for wealthier Americans, in a move seen as helping to spur consumer spending.
"U.S. activity is reliant on consumer spending so any move to help consumer start spending money particular in the Christmas period is going to be seen as positive for the markets," said Joshua Raymond, market strategist at City Index.
Retailers were also on the rise, with British group Tesco, the world's No.3 retailer, up 2.1 percent after it said overseas markets drove a 7.2 percent increase in third-quarter sales. Sainsbury rose 4.2 percent, with traders citing market talk of interest from Qatar.
Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC 40 rose 1.1 to 1.3 percent.
DEBT UNCERTAINTIES
Some uncertainty over the euro zone debt crisis persisted ahead of a vote by Irish lawmakers later on Monday on the country's toughest budget ever.
Euro zone finance ministers said on Monday they would not be taking new measures to tackle the contagion, amid worries the debt crisis could spread to peripheral euro zone states such as Portugal and Spain.
"Whilst there is some disappointment over the lack of EU developments yesterday, another meeting provides a further opportunity," said Keith Bowman, equity analyst at Hargreaves Lansdown.
"Nonetheless, investors will again be turning their attention to Ireland, given its budget announcement today, with individual government resolve to reduce budget deficits still high on the agenda for investors."
Appetite for risky assets such as equities improved, with the VDAX-NEW volatility index falling 3.9 percent to a two-week low. The lower the index, which is based on sell and buy options on Frankfurt's top-30 stocks, the higher the market's desire to take risk.
Among individual gainers, Norwegian fertiliser group Yara International rose 1 percent after it raised its earnings forecasts on strong demand for its nitrogen-based soil nutrients.
Spanish wind energy firm Iberdrola Renovables rose 4.6 percent after UBS upgraded its stance to "buy" from "neutral" on valuation grounds.
(Additional reporting by Atul Prakash; Editing by Erica Billingham)