UPDATE 2-Europe stocks resume record run as Middle East tensions ease

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* M&S, Tesco results suffer from a tough Christmas
* German stocks close at 2-year high
* Brussels-listed Argenx leads gains on STOXX 600

(Updates to close)
By Medha Singh
Jan 9 (Reuters) - European stocks picked up their record
rally on Thursday as the United States and Iran signalled a
desire to avoid further conflict, while rising expectations that
a Phase 1 U.S.-China trade deal will be signed next week also
provided a lift.
A 1.3% gain for Germany's trade-sensitive DAX .GDAXI stood
out among regional peers, also benefiting from data showing
better-than-expected industrial output in November that
dispelled any remaining worries about a recession in Europe's
economic powerhouse. "Confidence is recovering at a pace in Europe," said Steven
Holden, CEO of Copley Fund Research.
"Investors are positioned for outsized returns almost across
the board in terms of sectors and geographies as a pickup in
economic growth combines with near certainty that the ECB won't
raise interest rates for a long time yet."
The pan-regional STOXX 600 .STOXX hit an intraday record
high in Thursday's session, rising for the third straight day.
The benchmark index saw its best annual percentage gain last
year since the global financial crisis, but it had pulled back
about as much as 2% from its record levels after last week's
killing of a top Iranian general by the United States fanned
fears of an all-out conflict in the region.
Mirroring strength in its U.S. peers, technology .SX8P
index touched a near 19-year high and was among the best
performing European sub-sectors.
Chipmaker Dialog Semiconductor DLGS.DE as well as
anti-virus maker Avast AVST.L gained about 3% each after Bank
of America Global Research raised its price objective for both
the stocks.
It was a gloomy day for British retailers, however, as a
spate of reports reflected a challenging Christmas period.
Marks & Spencer MKS.L suffered its worst day in a year as
it took a hit from waste in its food business and weak menswear
and gift sales. Britain's biggest retailer Tesco TSCO.L ground out a 0.1%
rise in UK sales, enough to beat its main rivals amid the
toughest high street conditions in years. Its shares rose about
1%. Whilst M&S has farther to go to catch-up online than Tesco,
online rivals continue to take a toll on both, CityIndex analyst
Ken Odeluga wrote in a note.
Brussels-listed Argenx ARGX.BR led gains on the STOXX 600
after the antibody therapeutics developer updated its 2020
pipeline and flagged positive results from a midstage study.