UPDATE 2-Automakers lift European shares to more than two-week high

* Automakers post best day since early January
* Banking stocks lifted by strong earnings for UBS,
Santander
* Pound weakness helps FTSE as Johnson wins race to be PM

(Updates to close)
By Sruthi Shankar and Medha Singh
July 23 (Reuters) - A surge in automakers and strong
earnings from Europe's banking heavyweights lifted the main
STOXX 600 index to its highest level in more than two weeks on
Tuesday, with investors taking political upheaval in Britain and
Spain in their stride.
The pan-European benchmark .STOXX closed at its highest
since July 4 as automakers .SXAP rallied 3.8% for their
strongest performance since early January.
French auto parts supplier Faurecia EPED.PA jumped 11.5%
after it maintained first-half profitability despite a China-led
decline in production, while Germany's Continental CONG.DE
rose 6.3% despite issuing yet another profit warning the
previous day, while rival Hella HLE.DE gained 6.8%.
"Industrials are up because they are cheap and unloved and
none of them produced bad enough numbers," said Toby Clothier,
co-head of Global Thematic Group at Mirabaud Securities in
London.
"There is clearly some switching to cyclical things that are
cheap in terms of old-fashioned metrics - earnings, dividend
yield."
After a heavy sell-off in May on worries about a protracted
U.S.-China trade dispute denting corporate profits, investors
have bought back into stock markets in Europe and elsewhere on
expectations that leading central banks will loosen monetary
policy to encourage growth.
The European Central Bank could set the stage for a
September interest rate cut when it meets on Thursday and the
U.S. Federal Reserve is expected to cut rates by 25 basis points
next week. Europe's banking index .SX7P , which has lagged most other
sectors this year on expectations of lower interest rates,
gained 2% after Swiss lender UBS UBSG.S reported its best
second-quarter results in nearly a decade, lifting its shares by
2.6%. Austrian chipmaker AMS AMS.S , meanwhile, climbed by 7.3%
after it forecast a strong third quarter, helping to drive a 1%
advance for the tech index .SX8P . Despite largely positive earnings so far, investors are
concerned momentum could soon falter. Data from Refinitiv showed
companies listed on the STOXX 600 index are expected to report a
0.5% drop in second-quarter earnings, a reversal from 0.2%
growth forecast a week ago. Away from earnings, German carmaker Daimler DAIGn.DE rose
4.4% on news that China's Beijing Automotive Group Co (BAIC) had
bought a 5% stake in the company. The Auto-heavy German market
.GDAXI was Europe's biggest gainer, rising 1.6%.
The weak pound allied with the international exposure of
London's FTSE 100 .FTSE helped the index to firm slightly
after Boris Johnson won the contest to be Britain's new prime
minister, with investors concerned he could lead Britain towards
a no-deal Brexit. GBP/ .L
Better than expected results for Spanish lender Santander
SAN.MC , which gained 3.6%, helped investors shrug off news
that Spain's Socialist leader Pedro Sanchez failed in a first
attempt to win parliament's backing to form a government. He now
has two days to try to strike a deal with the far-left Unidas
Podemos before the second vote.