UPDATE 2-European stocks hit two-week high as Trump update lifts global mood

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* Oil majors up as crude prices surge 6%

* Spanish stocks outperform on bank M&A talks

* Cineworld slumps on shutting theatres
(Updates to market close)

By Sruthi Shankar

Oct 5 (Reuters) - European shares closed at a two-week high
on Monday, as positive updates on U.S. President Donald Trump's
health, a U.S. stimulus package and a spate of dealmaking
activity lifted investor spirits.

The pan-European STOXX 600 index gained 0.8%,
extending gains from last week. Sectors considered more
economically sensitive such as oil and gas, travel and
leisure, and automakers boosted the main
markets.

That was despite a 36.2% plunge in Cineworld after
the world's second-biggest cinema chain said it would close all
of its UK and U.S. movie theatres later this week, leaving as
many as 45,000 workers unemployed.

Oil majors Royal Dutch Shell, BP and Total
surged, with crude prices jumping more than 6%.

Investors took heart from signs that Trump's health is
improving after he tested positive for COVID-19 on Friday, news
that sent financial markets into a tailspin.

Doctors treating Trump said he could be sent back to the
White House as soon as Monday, although outside experts warn
that his case may be severe, raising uncertainty about the
outcome of the Nov. 3 presidential election and a new U.S.
fiscal stimulus being debated by lawmakers in Washington.

"Markets may remain choppy over the coming weeks," said
Graham Secker, chief European equity strategist at Morgan
Stanley.

"Once we get some clarity on the U.S. election, Brexit and
vaccine front, I think that's going to be a positive catalyst
for market.

"In the next 3-6 months view, this is a market where you'd
want to buy into the weakness because we do expect 2021 to be
quite a lot better than what we have been seeing this year."

Telecom stocks rose the most among sectors, with Vodafone
up 4.7% after its lenders approved the merger of India's
Bharti Infratel and Indus Towers, in which Vodafone
has a stake.

Madrid-listed stocks outperformed with 1.2% on
reports of consolidation in the banking sector.

Unicaja jumped 15.1% after it confirmed reports
that it was in preliminary talks for a potential merger with its
peer Liberbank, which surged 13.6%.

Italy's Nexi rose 3.1% after SIA and it agreed a
long-awaited merger to create a dominant domestic payments group
with 1.8 billion euros ($2 billion) in revenue.

French waste and water utility Suez fell 4.2%
after investment fund Ardian decided not to make a bid in
competition with bigger rival Veolia.
(Reporting by Sruthi Shankar; editing by Uttaresh.V and Ed
Osmond)