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July 1 (Reuters) - European stocks rallied on Monday,

with French shares leading the way after the far-right National

Rally (RN) party scored historic gains in the first round of

parliamentary election, but by a smaller margin than what some

polls had suggested.

France's blue-chip CAC 40 index jumped 2.6% to lead

gains among regional markets, with the country's main lenders

including BNP Paribas, Societe Generale and

Credit Agricole advancing between 4.8% and 7.9%.

That helped the region-wide STOXX 600 index scale

1% by 0709 GMT, after four consecutive sessions of losses.

The RN and allies had 33% of the vote, followed by a

leftwing bloc with 28% and President Emmanuel Macron's centrists

with just 20%, but the final result will depend on days of

horsetrading before the July 7 run-off.

The market reaction was mostly a case of 'buy the rumour

sell the fact' and chatter that National Rally may not secure an

absolute majority in the second round, said Ipek Ozkardeskaya,

senior analyst at Swissquote Bank.

The CAC 40 closed at its weakest level in more than five

months on Friday on concerns about France's fiscal discipline

under the new government.

Among single stocks, Atos climbed 11.7% as the

French technology company reached an agreement with a group of

banks and bondholders on terms for its debt restructuring.

Nestle rose 1.1% after its CEO said in an interview

to a local weekend paper that the Swiss food giant is targeting

stable growth in sales volumes from the second quarter

throughout the remainder of the year as cost inflation eases.