UPDATE 2-Banks boost European stocks as recovery hopes grow

(For a Reuters live blog on U.S., UK and European stock
markets, click LIVE/ or type LIVE/ in a news window)

* European banks hit fresh 1-year high

* Rising yields lifts cyclical stocks

* Pearson jumps on targeting consumers directly with new
strategy
(Adds comments, updates prices throughout)

By Sruthi Shankar and Shreyashi Sanyal

March 8 (Reuters) - Shares of banks and automakers lifted
European shares on Monday as investors continued to move into
economy-linked sectors on hopes of a solid economic rebound from
the coronavirus downturn.

The pan-European STOXX 600 index gained 2.22%, its
best one-day performance since early November. The banking
sector gained 3.73% to hit a fresh one-year high.

Spain's Banco de Sabadell jumped 7.1%, while HSBC
, Banco Santander and ING Groep rose
more than 2%.

Automakers and insurers also rose about 3%,
while sectors considered bond-proxies like utilities and
personal & household goods were among the laggards.

"The reflationary trade is being more supportive of European
stocks in general because they're not as weighted towards growth
and tech that the U.S. is," said Neil Wilson, chief market
analyst at Markets.com.

"You've got some progress on trade with between Europe and
the U.S. and that's good for some of the companies like
Rolls-Royce."

Aero engines-maker Rolls-Royce rose 7.3% to top gains
on UK's blue-chip FTSE 100. The European Union and the
United States agreed on Friday to suspend tariffs imposed on
billions of dollars of imports in a 16-year-old dispute over
aircraft subsidies.

Meanwhile, England's schools reopened to all pupils on
Monday, marking the first step back towards normality as
COVID-19 infection rates fall.

Data also came in positive, with the Ifo economic institute
saying the mood in the German manufacturing sector improved for
the third month in a row in February.

On the radar, a European Central Bank meeting later this
week will show if policymakers have decided to step up the pace
of emergency bond purchases to calm skittish financial markets.

"What they won't welcome is the rise in borrowing costs that
has come about as a result of the recent surge higher in global
bond yields," said Michael Hewson, chief market analyst at CMC
Markets.

Pearson's jumped 6.4% as its new boss set out his
plan for the British education group to grow beyond schools and
colleges with a strategy to build a lifelong direct connection
to consumers by helping workers to learn new skills and retrain.

German meal kit delivery company HelloFresh sank
5.0% after BNP Paribas downgraded the stock to "underperform".

London Stock Exchange fell 6.7%, extending its
slide from Friday when it forecast higher costs for integrating
data and analytics company Refinitiv, which it acquired in
January for $27 billion.
(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru;
Editing by Subhranshu Sahu, Saumyadeb Chakrabarty and Jonathan
Oatis)