UPDATE 2-European stocks lifted by Chinese export data, strong earnings

* Global mood steadies as China's April exports rebound
* ArcelorMittal surges on Q1 profit beat
* Air France dips as it sees operating losses widening
* Concerns over long-term demand persist

(Updates to close)
By Sruthi Shankar and Ambar Warrick
May 7 (Reuters) - European shares closed higher on Thursday
as a surprise rise in China's exports suggested some resilience
in global demand, while a batch of mostly strong earnings also
provided cheer.
The pan-European STOXX 600 .STOXX ended up 1.1%, led by
gains in retail .SXRP , basic resources .SXPP and financial
services .SXFP .
ArcelorMittal MT.AS , the world's largest steelmaker,
jumped 6.8% after its first quarter profit beat expectations.
Still, the french firm flagged much weaker profits in the
medium-term due to the coronavirus. German online fashion retailer Zalando ZALG.DE rose 11.5%,
leading gains in the retail sector, after it said sales were
recovering from an initial hit from coronavirus lockdowns, and
despite a first-quarter loss. Calming some fears over global demand, Beijing reported a
3.5% rise in April exports, confounding market expectations for
a sharp fall, as factories restarted production after the
coronavirus pandemic. "Market reaction has generally been driven by things not
getting any worse," said Will James, deputy head of European
equities at Aberdeen Standard Investments in London.
"There's probably a bit of danger to extrapolate a similar
path of recovery within Europe and elsewhere because in China,
the state is very heavily involved."
The data also pushed up commodity prices, benefiting mining
and oil stocks. O/R MET/L
However, analysts were sceptical of the long-term outlook,
given that steep economic contractions and spiking unemployment
would likely cripple industrial and consumer demand.
"With the lockdown measures lengthened and only phased out
very gradually, the euro zone economy is likely to shrink by
around 8% this year," wrote ING Economist Peter Vanden Houte,
adding that production would remain below capacity for a long
time due to the need for social distancing.
European shares have held around two-month highs over the
past few weeks but have struggled to move beyond a tight range
as virus news and the threat of a renewed Sino-U.S. trade spat
resulted in caution.
Some disappointing earnings forecasts also cast a shadow,
with Air France AIRF.PA dipping more than 3% as it predicted
operating losses would widen "significantly" in the April-June
quarter, with 95% of flights expected to remain grounded.
British Airways-owner IAG ICAG.L fell around 3% after it
warned that passenger demand would not return to previous levels
until 2023, and it would seek to defer deliveries of 68
aircraft. Spanish telecoms company Telefonica SA TEF.MC fell after
it withdrew its 2020 financial guidance and reported a sharp
fall in first-quarter net profit.