UPDATE 4-European shares log best day in a month as stimulus boosts revival hopes

* U.S. Fed's corporate bond-buying plan sets off rally
* Travel, construction, banking stocks lead gains
* Cineworld up after saying all theatres to reopen by July
* Germany's Zalando slips following stake sale

(Adds comments, updates prices to close)
By Sagarika Jaisinghani and Shreyashi Sanyal
June 16 (Reuters) - The pan-European STOXX 600 index
recorded its best day in a month on Tuesday, joining a global
rally after the prospect of historic monetary and fiscal
stimulus revived hopes of an economic rebound from the COVID-19
pandemic.
The index .STOXX rose 2.9%, recovering some of the losses
of recent sessions when grim economic forecasts and a resurgence
in infections in the United States and China encouraged
investors to play safe.
German .GDAXI and Italian .FTMIB shares outperformed
their European peers, with cyclical sectors including travel
.SXTP , construction .SXOP , banks .SX7P and autos .SXAP
gaining 3-4%.
Aggressive global stimulus has helped to power a rebound in
European equity markets since a coronavirus-fuelled crash in
March, with the STOXX 600 index now only about 16% below its
February record high.
The U.S. Federal Reserve will start purchasing corporate
bonds on Tuesday through the secondary market corporate credit
facility, one of several emergency facilities to shore up
liquidity. "It reinforces our view that the central bank's actions will
be conducive to further gains in the prices of equities," said
John Higgins, chief markets economist at Capital Economics.
But Fed Chairman Jerome Powell said a full U.S. economic
recovery will not occur until the American people are sure that
the novel coronavirus epidemic has been brought under control.
Further boosting global sentiment, a report said the Trump
administration was preparing a nearly $1 trillion infrastructure
proposal, while talk that U.S. firms may be allowed to work with
China's Huawei on new 5G standards eased trade jitters.
MKTS/GLOB
Europe's volatility index .V2TX retreated for a second
straight day and was on track for its biggest daily percentage
fall in a month.
Travel and leisure stocks rose 1.7%, with the British cinema
operator Cineworld CINE.L rising 1% after saying it expected
all of its theatres to reopen by July. The German airline Lufthansa LHAG.DE was 2.5% higher after
saying late on Monday it was seeking agreements with worker
representatives by June 22 on how to make cuts equivalent to
22,000 full-time positions. The German online fashion retailer Zalando ZALG.DE fell
4.2% after Swedish investment firm Kinnevik AB KINVb.ST sold a
stake. Equipment rental giant Ashtead Group AHT.L soared 9.6% to
a record high after proposing a dividend at a time when most
firms have scrapped payouts to shore up cash reserves to ride
out the economic slump.