UPDATE 1-Trade detente hopes turbocharge European shares, Casino surges

* STOXX 600 up 1.2 pct

* Casino gains 4 pct on Amazon partnership

* H&M tumbles 6.8 pct after Q1 results(Updates prices, adds quotes, details)

By Helen Reid

LONDON, March 27 (Reuters) - European shares surged onTuesday on incipient signs of a detente in trade rhetoricbetween Washington and Beijing, while French supermarket Casinowas boosted by a grocery delivery partnership with Amazon.

The STOXX 600 index gained 1.3 percent with allsectors rising, on track for its best day in seven weeks, whileGermany's DAX led with a 1.6 percent rise.

European markets took their cue from a robust rebound onWall Street and Asian stocks after reports the United States andChina were negotiating to avert a trade war.

It marked a sharp bounceback from the previous days, in asign that volatility was returning to stock markets.

"The volatility that we're seeing in markets reflects thosewho were initially fearful of the headlines, and those that seeopportunities within that," said Chris Dyer, director of globalequity at Eaton Vance.

Dyer remains overweight European stocks and underweight theU.S.

"What we see in Europe is valuations are lower, whereas theopportunity for margin expansion is more significant," he said,adding there is a "fair dispersion" between European and U.S.valuations.

He said he had added to some industrials stocks that hadsuffered due to the fear of trade wars.

Autos,, chemicals, tech and basicresource sectors led gains after having suffered themost from fears of increased protectionism.

Casino shares jumped 4 percent after its grocerychain Monoprix said it would start selling its products toParisian customers through Amazon's Prime Now servicethis year.

Bernstein retail analyst Bruno Monteyne said the deal wasunlikely to be a "game changer" to competition in the Frenchgrocery market.

"In the UK Amazon Prime Now has been selling Morrisonsproducts for two years and is hardly measurable (0.07 percent ofthe UK market and growing at the paltry 50 percent)," he wrotein a note to clients.

Despite Casino's share price gains, the retail sector indexlagged the market. Amazon's expansion into Europe hasstruck fear into investors in some supermarket stocks seen asless adapted to a new retail environment.

A 6.5 percent fall in H&M shares also draggedretail stocks down. The Swedish fashion firm flagged furthermarkdowns in the second quarter, reporting profits for Q1 fellroughly as expected.

The losses took H&M shares to their lowest in 13 years,trading at 119 Swedish krone, around a third of their value attheir peak in March 2015.

Akzo Nobel shares gained 3.8 percent after thepaint maker sold its specialty chemicals business to U.S.private equity firm Carlyle Group and Singapore's GIC for 10.1billion euros ($12.6 billion) and said the bulk of the proceedswould go to shareholders.

Among tech stocks, chipmaker ams led gains, rising3.4 percent, while peer Infineon led the DAX with a2.7 percent gain, and STMicro climbed 2.2 percent.

These semiconductor stocks have been the best-performing ofthe tech sector, leading last year's equity rally.

(Reporting by Helen ReidEditing by Kit Rees and Peter Graff)