* FTSEurofirst 300 gains, still down 7 pct this month
* Energy, mining shares lead advance as commodity prices rise
* Tod's rises after strong sales (Adds closing prices)
By Alistair Smout and Danilo Masoni
LONDON/MILAN, Jan 22 (Reuters) - Europe's top equity index posted its biggest one-day gain since October and its first weekly rise this year on Friday, buoyed by a rally in energy shares from close to a 12-year low.
The pan-European FTSEurofirst 300 was up 3 percent at 1,332.38 points by the close, putting it up 2.7 percent for the week. It was the first weekly rise of 2016 and the biggest since November.
The last time the index rose 3 percent in one day was on Oct. 5, 2015.
The market has been rocked by a drop in the price of oil to its lowest in more than a decade and concerns about global growth. Many investors said these worries were overdone.
"Markets have gone sharply against us so far this year, but the underlying economic fundamentals continue to support our positive view for 2016," said Alan Higgins, UK Chief investment officer for Coutts.
The index extended a rally from the previous session, when it gained 2.1 percent after European Central Bank head Mario Draghi said financial market turmoil and concern over China would prompt the bank to review its monetary policy in March.
On Friday, oil companies led the gains, rising 5.1 percent, after oil prices rallied above $30. Cold weather as well as firmer financial markets gave traders reason to cash in on record short positions.
Shares in oil majors Total, Royal Dutch Shell and Eni rose 3.4 percent to 5.4 percent.
Oil was still set for its biggest January decline in 25 years, which took the shares to their lowest level since 2003 this week.
"Markets have seen a dramatic shift in sentiment in the space of a few days," said Jasper Lawler, market analyst at CMC Markets, adding that recent volatility in oil prices would keep equity investors nervous.
"The rally in stocks (on Friday) is more about the oil price than hopes of stimulus from the ECB. That puts it on shaky ground."
Markets trimmed gains heading into the close, with selling in riskier sectors such as mining and Italian banks ahead of the weekend, traders said.
The FTSEurofirst 300 is down around 7 percent since the start of the year and some investors say the rebound could be short-lived.
"More action will be needed by other central banks, like the BOJ and the PBoC, in order to bring much-needed long-term calm and optimism back into the markets," said City of London Markets trader Markus Huber, referring to Japan and China.
Italian luxury goods Tod's rose 3.7 percent after reporting a better-than-expected rise in 2015 sales.
Delhaize rose 2.8 percent on solid results. German software maker SAP was up 0.4 percent, giving up stronger gains earlier on as some brokers said its new 2017 target was no big surprise. (Editing by Larry King and John Stonestreet)