European shares lifted by banking stocks, M&A hopes boosts Telecom Italia
* Telecom Italia up on sector consolidation prospects
* Credit Agricole rises on cost-cutting plans
* Volkswagen underperforms as company faces US subpoena (Adds details, updates share prices)
By Sudip Kar-Gupta and Danilo Masoni
LONDON/MILAN, March 9 (Reuters) - European shares rose on Wednesday with banking stocks among the leading gainers on expectations about European Central Bank stimulus measures and Telecom Italia boosted by talk about a possible tie-up with Orange.
The pan-European FTSEurofirst 300 index, which fell 0.9 percent on Tuesday to around its lowest level in a week, rose 1 percent by 1118 GMT, while the euro zone's blue-chip Euro STOXX 50 index was up 1.3 percent.
The FTSEurofirst remains down by around 7 percent since the start of 2016, with stock markets having been hit by signs of a slowdown in China, the world's second-biggest economy, weaker euro zone data and concerns over Europe's banking sector.
But some investors said sentiment was helped by expectations of more monetary stimulus measures from the ECB on Thursday.
The ECB is expected to make a 10 basis-point cut to push its deposit rate, taking it deeper into negative territory, while some type of adjustment of the central bank's 1.5 trillion euro asset purchase programme is also seen as a near certainty. Continuación...