European shares rose on Thursday morning, with the banking sector higher ahead of the European Central Bank's interest rate decision and its news conference likely to focus on bank stress tests.

Banking stocks featured among the top performers on expectations the tests will not be as stringent as feared. Lloyds Banking Group (LLOY.L), BNP Paribas (BNPP.PA) and Barclays (BARC.L) rose 2.4-3.3 percent.

Also helping the banking sector was news Credit Suisse had upgraded the sector to benchmark from 10 percent underweight, citing a better macroeconomic environment, attractive valuations and taxation and regulation plans being watered down.

By 0837 GMT (4:37 a.m. EDT), the pan-European FTSEurofirst 300 .FTEU3 index of top shares was up 0.6 percent at 1,012.35 points.

The ECB will face pressure to say whether Europe-wide stress tests on banks will be tough enough to convince markets of their worth but is likely to offer little beyond soothing words.

We have the ECB and bank stress tests coming up and investors are buying on hope they will not come out with bad news, said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.

When the market has been oversold and you're faced with an event which you are not sure about it is wise to buy the market as you could be sitting on a nice profit.

Meanwhile, the Bank of England and the European Central Bank are both expected to keep interest rates at record lows, of 0.5 and 1 percent respectively, in announcements at 1100 and 1145 GMT respectively.


Denmark's A.P. Moller-Maersk soared 3.9 percent after it upgraded its earnings guidance, saying its container shipping business had rebounded faster than expected.

Miners made ground, with Xstrata (XTA.L) leading the sector higher, adding 3.3 percent, buoyed by an upgrade to hold from sell by Panmure Gordon.

Technical charts showed there had been some support for the Euro STOXX 50 .STOXX50E, the euro zone's blue-chip index, at the 2,500 level. The index was up 0.5 percent to 2,648.31 points.

But volumes are very low and (I) think it will run out of steam at 2,750 if volumes remain thin, said Manoj Ladwa, senior trader at ETX Capital.

Across Europe, the FTSE 100 .FTSE index was up 1.1 percent, Germany's DAX .GDAXI was 0.4 percent higher and France's CAC 40 .FCHI rose 0.9 percent.

The Thomson Reuters Peripheral Eurozone Countries Index .TRXFLDPIPU was up 0.5 percent.

(Reporting by Joanne Frearson; Editing by Michael Shields)