* FTSEurofirst 300 index hits 1-month high
* Sheds part of gains after weak euro zone PMI survey
* LSE shares surge on possible counter-offer
* Barclays slumps after fall in profits
By Atul Prakash
LONDON, March 1 (Reuters) - European shares extended the previous session's gains on Tuesday, with London Stock Exchange leading the market higher after Intercontinental Exchange confirmed a possible counterbid for the British operator.
Barclays fell 7 percent after reporting a 2 percent fall in full-year pre-tax profit.
Shares in London Stock Exchange Group - which last week received a merger offer from Deutsche Boerse AG - surged 8 percent, helping the pan-European FTSEurofirst 300 reach a one-month high in initial deals.
But the index shed part of those gains, trading up 0.3 percent at 1,317.52 points by 0914 GMT after a survey showed euro zone manufacturing activity expanded at its weakest pace for a year last month .
The market got early support after activity in China's manufacturing sector shrank more sharply than expected in February, raising hopes that authorities in Beijing would announce further stimulus measures.
On Monday, China's central bank (PBOC) resumed its easing cycle, injecting an estimated $100 billion of long-term cash into the economy and cutting the reserve requirement ratio for commercial banks by 50 basis points.
"Despite somewhat weaker and disappointing Chinese PMIs overnight, the lowering of the reserve ratio rate by the PBOC is driving stocks higher. Furthermore, much of the weaker readings of the PMIs was attributed to possible distortions related to last month's Chinese New Year celebrations," Markus Huber, trader at City of London Markets, said.
Miners were the top sectoral gainers as prices of industrial metals recovered. The STOXX Europe 600 Basic Resources index was up 1.9 percent, helped by a 2.7 to 4.7 percent gain in shares of Anglo American, Rio Tinto and BHP Billiton.
Miner and commodity trader Glencore lagged the sector after reporting $5.8 billion of charges, mostly impairments following a slide in commodity prices, and a 32 percent fall in 2015 core profit. Its shares were up 0.5 percent.
A survey showing German manufacturing hardly grew in February had no clear impact on German shares, with the benchmark DAX index rising 1.3 percent.
The German index was helped by a rally in automobile stocks, with BMW gaining 2.5 percent. The automaker's Chief Executive Harald Krueger said at the Geneva auto show on Tuesday that BMW aims to remain the top-selling luxury carmaker ahead of Mercedes-Benz and Audi. (editing by John Stonestreet)