Technip leads european share rebound in thin trade

* FTSEurofirst 300 up 0.7 pct, Euro STOXX 50 up 1 pct * Technip rises 2.5 pct after Mexico contract win * Buy VSTOXX, sell VIX to protect against euro risk -SocGen By Francesco Canepa

LONDON, Oct 5 (Reuters) - European shares rose in thin tradeon Friday as investors bought into recent dips, with F rench oilservices firm Technip leading the pack after winning acontract in

Mexico. Technip shares rose 2.5 percent by 1121 GMT, having traded80 percent of its average daily volume, after a consortium ledby the group won a $2.7 billion engineering procurement

contractin Mexico. It topped gainers in oil & gas , one of thebest-performing sectors along with basic resources. Investors bought into recent falls on expectations ongoing

cashinjections from the U.S. Federal Reserve would support equities,as well as the price of oil and metals. The Fed announced an aggressive quantitative easingprogramme last month in a bid

to shore up the U.S. economy andcounter the effect of the euro zone debt crisis, strengtheningstimulus efforts by major central banks around the world. "The market is in a pendulum: on

the one hand you've got ahuge amount of debt, which will continue to be a burden on theeconomy," Mouhammed Choukeir, chief investment officer atKleinwort Benson, said. "On the

other hand, there are the liquidity injections, theprinting press. Currently we are in the printing press zone." In this context, Kleinwort Benson maintains a neutral stanceon

equities, which it hedges through options to sell majorindices if new, stringent austerity measures in Europe in comingmonths depress the region's economy further and drag equitiesdown.

The pan-European FTSEurofirst 300 index was up 0.7percent at 1,107.86 points, having traded a mere third of itsdaily volume average. The euro zone blue-chip Euro STOXX 50 was up 1percent at

2,511.16. It has fallen 3.2 percent from a six-monthhigh hit in mid-September, when intervention pledges by the ECBand the Federal Reserve had fuelled a 26 percent rally from lateJuly.

Investors have been fretting over Spain, which is seen asbound to request a bailout to allow it to access support fromthe European Central Bank. Vincent Cassot, head of equity derivatives

strategy atSociete Generale in Paris, said the Fed's action was momentarilyoutweighing structural problems in Europe but advised protectingagainst possible downside. He advised doing so

by buying options to buy impliedvolatility on the Euro STOXX 50 index , which tracksoption prices on the euro zone blue-chip index and tends to risewhen the cash gauge falls, financing the

trade by sellingequivalent options on the U.S. implied volatility index . "The risk on European equities is certainly bigger than onthe S&P," Cassot said. "Given the

overall context, it's safer tobe long\short volatility in a pair trade, so you're not exposedto only one scenario." U.S JOBS DATA Traders said the Fed's pledge to buy

mortgage debt eachmonth until the job market improves had reduced the significanceof U.S. unemployment data due at 1230 GMT, since the reading -expected to tick up to 8.2 percent - was

unlikely to change thecentral bank's view either way. "The Fed has taken the excitement out of the numbers thatused to drive markets," Andy Ash, head of sales at

monumentSecurities, said. "There's very little positioning going on. Toexcite the market, you would need to see an economicallypositive number." U.S. non-farm jobs data, due

to be released along with theunemployment rate, are expected to have increased by 113,000last month, according to a Reuters poll. Monument's Ash said mining stocks could rally if the

readingcame in at or above 125,000 while a reading of 50,000 wouldprobably trigger a correction. (Editing by Susan Fenton) (([email protected])(0044)(0)(2075423871)(Reu ers

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