* FTSEurofirst 300 rises 0.6 percent
* Law makers raise hopes of early U.S. fiscal deal
* Basic resource ad banks lead gainers
* Kingfisher down as Q3 profit falls
By David Brett
LONDON, Nov 29 (Reuters) - European stocks rose early on Thursday, echoing gains overnight in the United States as law makers there offered hope that a deal would be struck to avert enormous automatic budget cutbacks at the end of the year.
The FTSEurofirst300 rose 7.06 points, or 0.6 percent, to 1,116.33 by 0837 GMT. The STOXX Europe 600 Basic Resources index, meanwhile, was up 1.7 percent.
President Barack Obama and House of Representatives Speaker John Boehner signaled intent that the Republicans and the White House could soon strike a deal to avoid a $600 billion ‘fiscal cliff’ of budget cuts and tax rises.
European shares have now gained 4 percent in the last seven trading days, bouncing back from near four-month lows in the middle of November.
“The default assumption appears to be that a (U.S.) deal will be reached before the year-end deadline,” Ian Williams, equity strategist at Peel Hunt, said.
Williams, however, cautioned that there could still be many bumps in the road before an agreement is reached, laying the foundations for a potentially choppy final month of the year.
“Investors would be well advised to treat the smoke signals from the ongoing fiscal negotiations in Washington with a degree of caution; they are only increasing the volatility in markets, which are already vulnerable to low-volume moves,” he said.
Resource stocks led gains but banking stocks were also among the gainers, with many investors still underweight after three years of fiscal and financial turmoil in Europe.
Japanese house Nomura favours banks including the UK’s Standard Chartered and HSBC, as well as other non-euro zone institutions Swedbank, DNB and UBS.
“While central banks can help alleviate short-term liquidity concerns and perceived tail risk around euro zone fragmentation, giving a short-term boost to the sector, the north/south divide in Europe is deeply entrenched,” Nomura analyst Jon Peace says in a note.
Poor economic growth in Britain and France weighed on Kingfisher, Europe’s No. 1 home improvements retailer, which saw third quarter profit fall 6 percent, also hurt by unfavourable foreign exchange movements. Its shares fell 1.7 percent.
The biggest faller was French electricity company EDF , whose shares shed more than 6 percent at one point, hitting an all-time low after the Le Parisien newspaper reported the group may have overcharged customers by close to 8.8 billion euros ($11.36 billion) since 2009.