UPDATE 2-China recovery hopes, upbeat data lift European shares; HSBC leads

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news window)
* Banks rally, touch highest level in nearly a month
* Euro zone retail sales rebound sharply in May as lockdowns
ease
* UK homebuilders jump on report on property tax relief
* German recovery from pandemic to be slow and painful, data
shows
* AMS jumps on getting EU approval for 4.6 bln euro Osram
buy

(Updates to close)
By Sruthi Shankar and Susan Mathew
July 6 (Reuters) - European shares closed at their highest
in nearly a month on Monday, as upbeat economic data tied in
with a rally in China's markets on hopes of recovery from a
coronavirus-induced slump.
The pan-European STOXX 600 .STOXX climbed 1.6% on
broad-based gains, with Asia-focused lender HSBC HSBA.L
jumping 6.6% to lead Europe's battered banks index .SX7P
almost 4% higher.
Other stocks exposed to China, including carmakers .SXAP ,
industrials .SXNP , energy firms .SXEP and luxury goods
makers, gained strongly.
London's FTSE 100 .FTSE and Spain's IBEX .IBEX ended 2%
higher, while Germany's DAX .GDAXI rose 1.6%.
Data showing a record rebound in euro zone retail sales in
May following a pandemic-driven historic slump in the previous
two months, and an unexpected growth in the U.S. services sector
last month further bolstered sentiment. Globally, the appetite for risk rose after mainland China
stocks .SSEC .CSI300 jumped more than 5%, as investors
stocked up on cheap funding to invest in an economy that
analysts predict will recover faster and better than other major
countries battling new waves of infections. .SS
"Trading exuberance in China, improving economic data, and
hopes for renewed stimulus efforts," support the day's rally,
said Edward Moya, senior market analyst at OANDA, New York. He
added that markets will continue to overlook increases in U.S.
COVID-19 cases until fatality numbers surge. But industrial orders data suggesting Germany's recovery
from the pandemic will be slow and painful gave some a pause for
thought. "Investor sentiment is still not euphoric, most brokers are
cautious in the short term and investor positioning remains
muted," said Berenberg strategists in a note.
Europe's STOXX 600 has recovered about 37% since March lows
driven in part by large stimulus measures and vaccine hopes, but
its still remains about 10% lower for the year.
Among individual stocks, sensor maker AMS AMS.S climbed 4%
on getting EU antitrust clearance for its 4.6-billion-euro
($5.20-billion) acquisition of German lighting group Osram
OSRn.DE . Swiss speciality chemicals group Clariant CLN.S slumped
12.6% to the bottom of STOXX 600 on trading ex-dividend.
UK homebuilders Persimmon PSN.L , Taylor Wimpey TW.L and
Barratt Developments BDEV.L rallied on reports that British
Finance Minister Rishi Sunak planned to raise a property tax
threshold, among other steps to reduce the economic toll of the
health crisis. .L
Barratt said it was starting the new financial year with
"cautious optimism" as its forward order book improved.