* FTSEurofirst 300 rises 1.4 percent
* Barroso's comments on euro bonds help equities
* Banking shares recover after hefty falls
* BP up on hopes report will reapportion blame
By Brian Gorman
LONDON, Sept 14 (Reuters) - European shares rose on Wednesday, as the European Commission said it was presenting options for euro area bonds, with some investors optimistic that this was an important step in addressing the euro zone debt crisis.
EC President Jose Manuel Barroso told the European Parliament that some of these could be implemented within the terms of the current European treaty, whereas others would require treaty changes.
Common bonds would be likely to lower borrowing costs of the region's peripheral economies.
"It would help in showing some positive firm action in addressing the issues, which we've seen a complete lack of," said David Coombs, fund manager at Rathbone Brothers, which has 15.2 billion pounds under management.
"I hold about 20 percent cash in my total return fund -- I won't be using that cash until I see some decisive action from the European area. If tomorrow they announced that all bonds were going to be (common) euro bonds, rather than from individual countries, I'd change my mind."
At 1125 GMT, the FTSEurofirst 300 index of top European shares was up 1.4 percent at 913.19 points after falling to a low of 892.01 earlier in a choppy session.
The index rose 1.1 percent on Tuesday, but is down 18.6 percent in 2011. Investors have cut their exposure to risky assets such as stocks following an escalation of the euro zone debt crisis, and weak data from major economies that have sparked concern they may go back into recession.
Coombs said common bonds would help boost market confidence as they would be a key step in a strategy of greater fiscal union.
Greek banks rose 5.1 percent. British banks RBS and Lloyds , affected by the euro zone crisis though Britain does not use the single currency, rose 6.8 and 3.8 percent respectively,
However, French banks were mostly lower after Moody's Investors Service cut the credit ratings of Credit Agricole SA and Societe Generale , citing their exposure to Greece's debt.
SocGen fell 3.4 percent, though Credit Agricole rose 3.8 percent.
BNP Paribas fell 3.4 percent after it announced plan to sell 70 billion euros of risk-weighted assets to help ease mounting investor fears about French bank leverage and funding.
The STOXX Europe 600 Banking Index is down more than 35 percent in 2011.
Other sectors to rise included autos , up 4.3 percent. The sector, which includes German heavyweights such as BMW , up 5.1 percent, has fallen sharply in the recent downturn, as economic confidence has waned.
Across Europe, Britain's FTSE 100 rose 1.6 percent, Germany's DAX rose 2.4 percent and France's CAC40 rose 1.8 percent.
BP RISES
Among individual companies, BP rose 4.5 percent after a report fuelled hopes a U.S. probe into the Macondo oil spill will spread the blame for the spill, thereby limiting BP's liabilities.
Economic news was mostly downbeat. The number of British people without a job on the ILO measure rose by 80,000 in the three months to July to 2.51 million, the biggest quarterly rise since August 2009.
Analysts said the euro zone debt issues meant investors should stay cautious.
The region's debt crisis, which has the potential to derail global economic recovery, prompted the United States to urge European leaders to take more effective coordinated fiscal policy measures, while China said rich economies should show they are serious about tackling the euro zone debt problem.
"A lack of leadership is really a matter of concern for the market. A lot of worries are now focussed on Germany in terms of splits there on how to deal with the region's debt crisis," said Keith Bowman, equity analyst at Hargreaves Lansdown.
"Valuations are low, but the problem is that they are dependent on future earnings . The concern is that if we have a deteriorating economic backdrop, the earnings outlook could also deteriorate. Stocks could be cheaper tomorrow."
According to Thomson Reuters Datastream, the STOXX Europe 600 index carried a 12-month forward price-to-earnings ratio of 8.3, against a 10-year average of 13.2.
Analysts said they were not optimistic that much would come from a conference call by Greek Prime Minister George Papandreou on Wednesday with French President Nicolas Sarkozy and German Chancellor Angela Merkel. (Additional reporting by Atul Prakash; Editing by Hans-Juergen Peters)
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