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* Travel & leisure sector leads gains
* Vodafone slides as annual profit drops
* UK jobless rate falls again, hiring up as lockdown eases
(Adds comments, updates prices throughout)
By Sruthi Shankar and Shreyashi Sanyal
May 18 (Reuters) - European stocks rose on Tuesday, with
Germany's equity index hitting a record high on optimism around
several countries easing economic restrictions, falling
unemployment rate in the United Kingdom and strong earnings
reports from companies.
The pan-European STOXX 600 index rose 0.2% to end
just shy of its record high hit last week, with the travel and
leisure index leading gains, while technology stocks
rose 0.6%.
The German DAX hit a record high and Italy's FTSE
MIB added 0.1%.
Inflation worries due to gains in commodity prices and
supply chain issues have raised fears of central banks dialling
back unprecedented fiscal and monetary policy support.
"Should we have inflation globally, then cyclical stocks see
better performance normally than growth stocks," UniCredit
strategist Christian Stocker said.
"The weight of cyclical stocks is much higher in Europe and
from a relative point of view, it is an advantage for European
equities."
UK stocks cheered data that showed Britain's unemployment
rate fell more than expected to 4.8% in the first quarter when
the country was under a tight lockdown, while hiring rose
further in April.
"The UK jobs market is mounting a recovery, after the
hardship caused by the pandemic," said Hugh Shields, financial
trader at Spreadex.
"With the latest lockdown restrictions being eased, and
further easing on the 21st of June, one can only presume this
number will soon return to pre-COVID 19 rates or better."
As the earnings season draws to a close, analysts expect the
profits of STOXX 600 companies to jump 90.2% in the first
quarter and 93.4% in the second, as per Refinitiv IBES data.
The world's biggest maker of hearing aids, Sonova Holding
, surged 11.5% after predicting strong growth this year
due to a market recovery and new products.
Winston cigarettes maker Imperial Brands rose 1.5%
after it reiterated its full-year outlook.
Telecoms took a hit as the UK mobile operator Vodafone
fell 8.9% after reporting a 1.2% drop in full-year
adjusted earnings, citing the effect of COVID-19 on roaming
revenue and handset sales.
French telecoms group Iliad slumped 10.2% after
saying it would revise down a key cash flow target as it steps
up spending on 5G networks.
(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru;
Editing by Arun Koyyur and Kevin Liffey)
