* FTSEurofirst 300 up 0.1 pct, rising for 8th session
* Madrid's IBEX surges after strong Spanish PMIs
* ECB opens door to unconventional measures
By Blaise Robinson
PARIS, April 3 (Reuters) - European shares rose on Thursday, with some benchmark indexes hitting multi-year highs, after the European Central Bank opened the door for unconventional measures to thwart the risk of deflation.
Spanish stocks outpaced the broad market after a purchasing managers' survey for the services sector, which accounts for about half of Spain's economic output, expanded more than expected last month, fuelling hopes economic recovery is picking up pace.
Spanish banks led the rally, with BBVA jumping 3.6 percent and Banco Popular gaining 3.9 percent. Madrid's IBEX rose 1.4 percent to 10,584.1 points, a level not seen in nearly three years.
They were also boosted, along with other euro zone banks, by comments from ECB President Mario Draghi indicating the central bank was ready to act to boost inflation if necessary.
"Sooner rather than later we will see the IBEX hitting 11,000 points," said Margarita Rivas, senior investment strategist at GVC Gaesco Valores, in Madrid.
"Within a few weeks, we've gone from fears of an escalation in Ukraine to euphoria following Draghi's words, which sounds disproportionate. But the fact is: people don't want to miss the rally so there's a strong buying pressure in the market."
The FTSEurofirst 300 index of top European shares ended 0.1 percent higher at 1,345.18 points, gaining ground for the eighth consecutive session, its longest winning streak since October.
The ECB held its main interest rate at a record low of 0.25 percent on Thursday, and Draghi told a news conference that if low inflation dragged on too long, action would be taken, marking a significant shift of tone from last month when he appeared to set quite a high bar to action.
"The Governing Council is unanimous in its commitment to using also unconventional instruments within its mandate in order to cope effectively with risks of a too prolonged period of low inflation," Draghi told a news conference, adding that printing money - quantitative easing - had been discussed at the policy meeting.
"The message is pretty clear: the ECB is ready to act, they have all the tools ready, and the fact that they are unanimous about it is very important. This is quite positive for equities," said David Thebault, head of quantitative sales trading at Global Equities, in Paris.
Euro zone banks were among the biggest gainers, with Natixis up 4.3 percent, UniCredit up 2.8 percent and Banco Espirito Santo up 3 percent.
The euro zone's blue-chip Euro STOXX 50 index rose 0.6 percent at 3,206.76 points, a level not seen in 5-1/2 years.
The UK's FTSE 100 index ended 0.2 percent lower, while Germany's DAX index rose 0.06 percent, France's CAC 40 was up 0.4 percent, hitting a 5-1/2 year high, and Italy's FTSE MIB gained 1.4 percent, just shy of a near three-year high hit in the previous session.
So far this year, the FTSE is down 1.5 percent, the DAX is up 0.8 percent and the CAC has risen 3.6 percent. In contrast, the IBEX is up 6.7 percent and the MIB has surged 15.9 percent.
Italy and Spain, which have the largest bond markets in the euro zone periphery, look set to gain the most from potential quantitative easing in Europe, but Germany could also benefit as the euro currency could slip, giving breathing space to German exporters, said Jonathan Stubbs, head of European equity strategy at Citi.
"If the ECB puts in place more aggressive easing, then the DAX will do a bit better. It's one of the countries that has more FX headwinds than others."
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
Additional reporting by Alistair Smout; Editing by Susan Fenton