UPDATE 2-European markets lifted by telecoms and media big guns

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* Media and telecoms companies lead STOXX 600 gains
* Kering shares slump as Gucci sales slow
* Spanish shares lag after Sabadell results

(Updates to close)
By Sruthi Shankar and Medha Singh
July 26 (Reuters) - Large-cap companies pulled European
stocks higher on Friday as a surge in Britain's Vodafone VOD.L
and strong earnings for media businesses and Nestle NESN.S
spurred recovery from a sell-off driven by the European Central
Bank.
The pan-European benchmark index .STOXX rose 0.3%,
bouncing back from its worst session in three weeks. London's
FTSE 100 .FTSE outperformed European peers with a 0.8%
advance, helped by telecoms companies.
Vodafone gained 10.6% to record it strongest performance
since late 2002 on plans to separate its towers unit in Europe
into a new company worth upwards of 18 billion euros ($20
billion) with a view to a potential stock market listing.
The STOXX 600 telecoms index .SXKP rose 2.3% as shares of
Cellnex CLNX.MC , currently Europe's biggest towers group,
gained 3.3% and Telecom Italia TLIT.MI rose 4.1% after
Vodafone agreed to jointly roll out 5G in Italy and merge their
mobile mast operations. However, media stocks .SXMP led the gains after upbeat
results from France's Vivendi VIV.PA , satellite operator SES
SESFd.PA and education company Pearson PSON.L . Another blue-chip stock to perform well was Kitkat maker
Nestle NESN.S , which rose nearly 2% after posting its fastest
quarterly sales growth in three years. "There has been a more positive set of corporate earnings
since yesterday's close and chiefly Vodafone," said City Index
analyst Ken Odeluga.
European shares took a beating on Thursday after ECB chief
Mario Draghi all but pledged to ease monetary policy further and
even hinted at a reinterpretation of the bank's inflation target
but disappointed some investors who had hoped for an immediate
cut to interest rates. Despite Thursday's blip, the main STOXX index posted a 0.8%
gain on the week, driven partly by hopes of policy easing from
the ECB as economic data points to a worsening outlook for
Europe's already slowing economy.
"There is a bit of reassessment and the market has attracted
some buyers back due to the big selling yesterday," said
Odeluga.
"We also had the U.S. GDP (data), which was not as bad as
expected and allows investors to go into the weekend with a bit
more positive sentiment."
U.S. data showed economic growth slowed less than expected
in the second quarter, though it did little to deter
expectations that the U.S. Federal Reserve will cut interest
rates by 25 basis points next week. Among the weak spots, Banco Sabadell SABE.MC and Caixabank
CABK.MC fell more than 6.5% after the Spanish lenders reduced
their 2019 earnings guidance, hurt by low interest rates.
Politics were also in the spotlight after Spain's parliament
rejected Pedro Sanchez's bid to be confirmed as prime minister
on Thursday. Sanchez said he will work to avoid a repeat
election but is no longer prepared to offer a coalition
government to far-left Podemos. Luxury stock Kering PRTP.PA slumped 7% as its main Gucci
brand posted a slower than expected rise in second-quarter
sales, hit by a blip in the United States.