UPDATE 2-European shares rise as U.S.-China trade deal clears fog; London lags

* Utility stocks at over 11-year high
* London shares lag regional peers
* Pearson falls to bottom of STOXX 600

(Updates to close, adds comments)
By Ambar Warrick and Shreyashi Sanyal
Jan 16 (Reuters) - European shares ended higher on Thursday
after the signing of a long anticipated Phase 1 U.S.-China trade
deal lifted some level of near-term uncertainty, while
disappointing earnings dragged down London shares.
The deal, signed in Washington on Wednesday, still raises
questions over daunting purchase commitments of U.S. goods by
China, while leaving existing tariffs in place. However, the prospect of no further escalation in the
economically damaging trade war encouraged a slight risk-on
mode.
"Investors are maybe not selling on the fact but just
pausing for thought that the deal has been signed which is also
a source of relief for most people," said Russ Mould, investment
director at broker AJ Bell.
The pan-European STOXX 600 index .STOXX closed up 0.2%,
with London's main index .FTSE lagging its continental peers.
Education company Pearson PSON.L sank to the bottom of the
STOXX 600 with a near 9% fall on a profit warning.
Market players will be shifting focus next week to the
quarterly reporting season as it kicks into high gear across
Europe.
European utility stocks .SX6P touched their highest levels
since late-2008 on strength in power generator RWE AG RWEG.DE .
Shares of the company rose amid reports that the German
government plans to compensate RWE with around 2.6 billion euros
($2.9 billion) for costs related to the country's planned exit
from coal. Defensive plays including utilities, healthcare .SXDP and
food & beverage .SX3P sectors have been pulled back into the
spotlight, a reversal from a rally in cyclical stocks which
benefited from optimism around an initial U.S.-China trade deal.
"The cyclicals have had a good run because of hopes for a
trade deal but people have been hoping to lock in some profits.
It all lies on the reporting season now, about what companies
have got to say about their prospects," Mould said.
German shares .GDAXI were flat after closing lower a day
earlier on dismal GDP data.
Economic growth in the euro zone's largest economy slowed
sharply in 2019, highlighting the widespread impact of the trade
war on demand for exports from the manufacturing-heavy country.
Oil and gas stocks .SXPP rose, tracking a rise in oil
prices as the trade deal pointed to more Chinese purchases of
American energy products, while a drop in U.S. crude inventories
also helped. O/R