UPDATE 2-European shares hit five-week high on rebound optimism, stimulus hopes

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* Utilities, technology, autos stocks lead gains
* FTSE 100 ends lower as Johnson sets out more restrictions
* Investors hopeful of more U.S. stimulus - strategists
* All eyes on EU summit later in the week

(Updates to close)
By Sagarika Jaisinghani
Oct 12 (Reuters) - European shares hit a five-week high on
Monday as optimism about a stable economic recovery in China and
hopes of more U.S. fiscal stimulus helped offset concerns around
surging COVID-19 cases across the continent.
The pan-European STOXX 600 .STOXX marked a third straight
day of gains to end 0.7% higher, led by utilities .SX6P ,
technology .SX8P and autos .SXAP stocks.
The Trump administration on Sunday called on the U.S.
Congress to pass a stripped-down coronavirus relief bill after
talks stalled on a more comprehensive stimulus deal.
"Investors have not lost faith that further stimulus
measures will follow and that an effective COVID-19 vaccine will
soon be placed on the market," said Milan Cutkovic, market
analyst at Axi.
But a jump in domestic coronavirus cases has raised the
spectre of fresh lockdowns and cast a shadow over a nascent
economic rebound.
With Italy preparing for nationwide curbs, the European
Central Bank's chief economist, Philip Lane, said the euro zone
economy was entering a tougher phase. UK Prime Minister Boris
Johnson also imposed a tiered system of further restrictions on
parts of England, including closing some pubs. British pub and restaurant owners Marston's Plc MARS.L and
Restaurant Group Plc RTN.L fell 5.3% and 9.3%, respectively,
while the blue-chip FTSE 100 .FTSE lost 0.3%. .L
"Investors are walking on thin ice," Cutkovic said. "Further
lockdowns would jeopardise the already fragile economic recovery
and have lasting effects on consumer confidence."
Data on inflation, industrial production and business
conditions is due later in the week. All eyes will also be on a
European Union summit on Oct. 15 and 16, particularly with a
UK-imposed deadline for a post-Brexit trade deal. "It seems progress has been made and if this continues, I
would expect talks to continue beyond that self-imposed UK
deadline," said Deutsche Bank strategist Jim Reid.
The Italian bourse .FTMIB ended 0.6% higher, shrugging off
a slide in bank stocks as Italian government bond yields fell
near record lows on expectations of a new round of stimulus from
the European Central Bank. As the third-quarter corporate earnings season gets under
way, analysts expect earnings at STOXX 600 firms to have
declined 38% year-on-year in the quarter following a 50.8% slump
in the prior quarter, according to Refinitiv data.
The European telecoms index .SXKP surged to a three-week
high, powered by a 6.8% jump for Dutch telecommunications
company KPN KPN.AS following a report that Sweden-based
private equity firm EQT was considering a takeover.