UPDATE 2-Manufacturing rebound, U.S. stimulus hopes lift European stocks

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* German factories post first growth in activity since 2018-
PMI
* Strong Wall Street start spurs more gains in Europe
* HSBC slides after warning of bigger loan loss
* International tourist arrivals for Spain slump 98% in June

(Updates to market close)
By Sruthi Shankar
Aug 3 (Reuters) - A modest expansion in euro zone
manufacturing activity and hopes of fresh U.S. stimulus lifted
European stocks across the board on Monday, with automakers,
miners and construction & material firms leading the gains.
After a lukewarm trading session in the morning, the
pan-European STOXX 600 .STOXX picked up momentum after a
strong Wall Street start and closed 2.1% higher. .N
German stocks .GDAXI outperformed, rising 2.7% after the
country reported in July an expansion in factory activity for
the first time since 2018, lifting hopes that the impact of the
pandemic was easing in the sector.
Factory activity across the euro zone expanded, reflecting
an improvement globally as China, Britain and the United States
reported upbeat numbers. However, analysts were cautious about a sustained recovery
amid concerns about a further tightening of restrictions in
Europe as COVID-19 cases rose. "The growth in new orders for the Euro area outpaced
production in July fuelling the optimism," Citi analyst Luis
Costa wrote in a note. "However, Germany's PMI has also reported
deep cuts to employment raising concerns about the
sustainability of the recent rebound."
Carmakers .SXAP were the top gainers in Europe, up 3.8%,
after Ferrari RACE.MI trimmed its full-year earnings forecast
but said its second quarter order book rose significantly versus
a year ago. The broad gains helped banking stocks .SX7P shed early
losses following a set of disappointing earnings.
Europe's biggest lender by assets, HSBC HSBA.L , dropped
2.9% after its half-yearly profits more than halved and the bank
warned its bad debt charges could blow past a previous estimate
to $13 billion this year. "While the Asian business remained resilient with limited
impact from the US-China tensions and Global Markets had a solid
quarter, pressure on Net Interest Margin (NIM) intensified and
the quarterly cost of risk increased further, driven by the
economic impact of COVID-19," analysts at Morningstar wrote.
France's Societe Generale SOGN.PA slipped 0.7% as it
reported a 1.26 billion euro ($1.48 billion) quarterly loss.
Spanish stocks .IBEX rose 1.4%, but underperformed
regional peers as the country saw the biggest jump in
coronavirus cases since a lockdown was lifted in June, while
data showed international tourist arrivals to Spain fell 98%
year on year in June. British engineer Senior Plc SNR.L , which counts planemaker
Boeing BA.N and heavy equipment maker Caterpillar CAT.N as
some of its biggest customers, tumbled 15.1% as it shelved its
interim dividend after swinging to a first-half loss.