* FTSEurofirst 300 up 0.3 pct, Euro STOXX 50 up 0.4 pct
* KPN unit sale, Vivendi deals spark rally in telecoms
* Reports on Chinese rail projects boost mining shares
By Blaise Robinson
PARIS, July 23 (Reuters) - European shares climbed in early trade on Tuesday, hitting seven-week highs with a flurry of deal activity sparking a sharp rally in the telecoms sector.
Dutch group KPN was up 5.6 percent after saying it will sell its E-Plus unit to Telefonica Deutschland for 5 billion euros in cash and a 17.6 percent stake in the merged company.
French construction-to-telecom conglomerate Bouygues surged 6 percent and SFR parent Vivendi added 3.8 percent after saying they entered talks to share part of their mobile networks.
Vivendi shares were also boosted by news that the group is in exclusive talks to sell its 53 percent stake in Maroc Telecom to Dubai-based Etisalat in one of the biggest emerging market deals this year.
At 0751 GMT, the FTSEurofirst 300 index of top European shares was up 0.4 percent at 1,213.49 points, a level not seen since early June. The STOXX Europe 600 telecom sector index rose 1.1 percent.
"The KPN news is good for telecoms overall, it fuels the M&A fever recently seen in the sector," David Thebault, head of quantitative sales trading at Global Equities, said.
"Earnings have also been relatively good so far, although the bulk of results still has to come. We'll have a better idea of the big picture by the end of the week, with the focus mostly on the guidance."
Miners also helped fuel early gains on Tuesday, after media reports from China that said the government would use railway projects to help cut gluts in steel, cement and other construction materials, and would not let economic growth sink below 7 percent.
Anglo American gained 2.5 percent and BHP Billiton added 1.9 percent. The sector is down 20 percent year-to-date, hurt by worries over the pace of economic growth in China.
"Anything even slightly positive coming out of China becomes a trigger because these shares are ripe for a technical rebound," a Paris-based equity and exchange-traded fund (ETF) trader said.
Around Europe, Britain's FTSE 100 index was up 0.5 percent, Germany's DAX index up 0.4 percent, and France's CAC 40 up 0.3 percent.
The euro zone's Euro STOXX 50 index was up 0.6 percent, at 2,741.03 points. The blue-chip index has surged 10 percent since late June, mirroring sharp gains on Wall Street, where the S&P 500 has hit record closing highs.