UPDATE 2-China respite spurs strong bounce in European shares

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* Chinese export and imports beat forecasts in July
* Yuan firms as Beijing signals intent to stabilize decline
* Adidas falls on lower second-quarter sales
* Carlsberg, Hargreaves rise after results

(Updates to close)
By Susan Mathew and Shreyashi Sanyal
Aug 8 (Reuters) - European shares had their best day in
almost two months on Thursday as upbeat trade data from China
and a steadying of its currency helped to calm some fears of
recession and a further escalation in Sino-U.S. trade tensions.
The pan-European STOXX 600 index .STOXX rose for a second
day, closing 1.7% higher, swept up in a global rally after days
of turmoil sparked by an escalation in U.S.-China trade tensions
last week.
All major indexes in Europe were up more than 1%, although a
fall in stocks trading ex-dividend kept a lid on gains in
London's FTSE .FTSE .
Data showed July exports in China rose at their fastest
since March, while a fall in imports was not as bad as a
forecast, soothing worries that the protracted and escalating
trade war will tip the world into recession. Trade-sensitive tech .SX8P and basic resources .SXPP
indexes led the gains, with no sector in the red.
The materials sector closed 2.5% higher, ending an
11-session losing streak during which it lost almost 16%.
The yuan recovered some ground against the dollar, although
China's central bank set its official midpoint below the seven
yuan to the dollar threshold for the first time since the global
financial crisis. CNY/
"Today's fixing is a message the People's Bank of China has
no definitive line in the sand but are only allowing the yuan to
weaken on their terms and at a reasonable pace to mitigate
possible outflows," wrote Stephen Innes, managing partner at VM
Markets.
"So the fear of rapid depreciation is fading."
But as Sept 1 nears - the day 10% tariffs on $300 billion of
Chinese imports are to take effect, traders remain cautious on
the possibility that the PBoC could continue to nudge the fix
lower, especially if there is no reversal in Washington's tariff
position, Innes says.
The central bank had let the yuan slide to its lowest in
more than a decade earlier this week, raising fears it would use
its currency as the new front in its trade dispute with the
United States.
These uncertainties have pushed investors into bonds and
gold and prompted central bankers around the world to get ahead
of the storm clouds by easing monetary policy.
On the earnings front, Zurich Insurance Group ZURN.S
surged nearly 4% after the insurer said it was set to beat its
2019 financial targets. This sent the Swiss main index .SSMI
2.3% higher in its strongest day in more than seven months.

But sportswear firm Adidas ADSGn.DE slumped 2.2% after
disappointing second-quarter sales.
Danish brewer Carlsberg CARLb.CO rose 11.3% to top
Europe's main index after it raised profit expectations for
2019. British fund supermarket Hargreaves Lansdown HRGV.L was
also up by 11.8% after a forecast-beating rise in full-year
assets.