UPDATE 2-European shares take U-turn on rising virus death toll

* Sharp swings in STOXX 600 last seen during 2008 financial
crisis

* Energy, travel & leisure lead gains

* More economic pain ahead as recession looms - analysts

* British firm Rentokil slumps on pulling 2020 forecast
(Updates prices, adds graphic)

By Sagarika Jaisinghani and Thyagaraju Adinarayan

March 25 (Reuters) - European stocks turned choppy again on
Wednesday with bourses across the region wiping off most of
their early morning gains as a sharp rise in the coronavirus
death toll brought back panic.

World markets enjoyed their best one-day percentage gain
since the 2008 financial crisis on Tuesday, adding roughly $3.4
trillion, as the United States was on track to approve a massive
stimulus package to curb the pandemic's economic toll.

However, fear returned after Spain reported 738 fatalities
from the coronavirus in the past 24 hours, the steepest increase
since the epidemic hit the country. Meanwhile in the UK, Prince
Charles, the 71-year-old heir to the British throne, has tested
positive for coronavirus.

The pan-European STOXX 600 index was up just 0.5%,
retreating from a more than 4% jump in the morning. Cyclical
sectors such as energy and travel & leisure were
still the biggest boosts to the index.

A London-based trader said the change in sentiment was in
part due to a sharp rise in the European death toll from the
coronavirus and also reflected that investors were nervous ahead
of U.S. Senate's vote on the $2 trillion coronavirus stimulus
package.

European stocks surged in recent days on stimulus measures
but are far from covering their steep 25%-plus losses from
February peak as analysts continue to take a red pen to their
estimates.

With the pandemic still far from contained in Europe,
several more companies have warned of lower profits, layoffs and
a halt in business activity amid widespread national lockdowns.

UBS said it expects a deep recession which will see Europe's
earnings fall by a third in 2020.

On Wednesday, U.S. officials reached a deal on a $2 trillion
package to aid small businesses and Americans hit by layoffs due
to the health crisis. The Senate will vote on the package later
in the day and the House of Representatives is expected to
follow suit soon after.

"It's very good that authorities came up with monetary and
fiscal co-ordination, but that's only damage limitation and it
doesn't necessarily help to stimulate the economy yet because
we're still in a lockdown," said Stefan Koopman, senior market
economist at Rabobank.

"Over the course of the summer, economic activity can pick
up a little bit, but even then we're still way behind growth
rates from 2018 and 2019. It will be a very very long year for
Europe."

European airlines, one of the worst hit sectors from travel
restrictions and evaporating passenger numbers over fears of
contagion, have appealed to governments for bailout packages to
prevent an industry collapse.

Air France-KLM, British Airways-owner IAG
, Ryanair and EasyJet gained between 1%
and 8% amid the broader rebound.

Export-heavy German shares index led the reversal
Wednesday noon falling 1.7%, a day after posting their best day
since 2008, while Europe's fear gauge jumped 6 points to
58.6 after dropping for four straight days as a modicum of calm
returned to financial markets.

"The Vix ... most certainly needs to fall below 30 and only
then the real buyers return," said Stephen Innes, a markets
strategist at AxiCorp.

"Ultimately none of that will happen until the data has
bottomed and signs of life emerge around the world."

(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by
Shounak Dasgupta and Raissa Kasolowsky)