UPDATE 2-European shares recover from dismal week, FTSE weathers Johnson's tough Brexit terms

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* STOXX 600 up 0.3% after losing 3% last week
* France's Ingenico surges on 7.8 billion euro deal
* Euro zone factory activity suggest worst may be over
* Oil stocks drop as China worries hurt prices
* China-focused miners weaken

(Updates to close)
By Susan Mathew
Feb 3 (Reuters) - A multi-billion euro merger and
encouraging manufacturing data helped European shares close
conformably higher on Monday after their worst week in six
months amid jitters over the economic fallout from a virus
outbreak in China.
In London, after Britain officially exited the European
Union on Friday, Prime Minister Boris Johnson set out tough
terms for Brexit talks, rekindling fears Britain would reach the
end of an 11-month transition period without agreeing a trade
deal. Internationally focused companies on London's blue-chip
index .FTSE benefited as the hard Brexit talk pummelled the
pound. The FTSE 100 ended 0.6% higher. GBP/ .L
The pan-European STOXX 600 index .STOXX built on its gains
to close up 0.3% with shares of French payments services
provider Ingenico Group INGC.PA topping the index.
Ingenico surged 17.2% after peer Worldline WLN.PA agreed
to buy the company for 7.8 billion euro ($8.7 billion). Shares
of smaller rival Nexi NEXII.MI also rallied amid talk of more
sector consolidation, taking the tech sector up 1.6%, the most
among European sub-sectors.
European travel and leisure stocks .SXTP , which have been
among the worst hit by uncertainty over China, rebounded 0.3% as
budget airline Ryanair RYA.I led gains after it swung to a
profit in the third quarter.
Further boosting sentiment, a survey on Monday showed euro
zone factory activity contracted again in January but did so at
its shallowest rate since mid-2019, suggesting the worst may be
over for the bloc's battered manufacturing industry.
With investors also taking heart from similar data buoying
Wall Street, the STOXX 600 recovered from a 3% slump last week
when the World Health Organization declared the virus outbreak
in China a global emergency. The virus has claimed 361 lives
within China so far. "There is still some optimism that for the most part (the
outbreak) is contained within China, and in addition investors
are appreciating slightly better than expected PMI data which
highlighted that we are seeing some signs that Europe might be
turning the corner," said Edward Moya, senior market analyst at
Oanda New York.
Oil and gas stocks .SXEP were the worst performers for the
day as worries over demand in China continued to erode oil
prices. O/R
Basic resources stocks .SXPP , which consist of several
China-focused miners, also dropped. Mining heavyweights BHP
Group BHPB.L and Glencore GLEN.L shed about 0.2% and 0.4%,
respectively.
German medical technology firm Siemens Healthineers
SHLG.DE was among the worst performers on the STOXX 600 after
it reported disappointing first-quarter results.