UPDATE 2-European stocks mark best day in nearly 4 months after bond-driven rout

* Travel, mining stocks lead gains

* BA owner IAG jumps on multiple PT hikes

* Spain's Amadeus tops STOXX 600

* Positive EU manufacturing data boosts sentiment
(Updates with market close)

By Sruthi Shankar and Ambar Warrick

March 1 (Reuters) - European stocks ended higher on Monday
after bond markets stabilized from a sharp selloff last week,
with travel and leisure stocks leading gains on optimism over
COVID-19 vaccination programmes and a large U.S. stimulus
package.

The pan-regional STOXX 600 index rose 1.8%, its
best day since early November, after losing more than 2% last
week. Travel and leisure stocks added more than 3%.

Data also showed manufacturing activity picked up pace in
major euro zone economies in February, inspiring some confidence
about an economic recovery this year, while a separate reading
showed German inflation held steady in the month.

European stocks had retreated from one-year highs last week
as the possibility of rising inflation and higher bond yields
fuelled concerns over monetary policy tightening by central
banks.

Accommodative policies and bumper stimulus measures have
enabled stocks to recover from pandemic-driven lows last year.

Global stocks rallied on Monday tracking a pullback in
yields, while the rollout of a third COVID-19 vaccine in the
United States, along with progress towards a $1.9 trillion
stimulus package, also boosted sentiment.

"Equities should prove resilient, but the recent pick-up in
real yields deserves to be watched. It is more toxic for highly
valued risk assets, including growth stocks," analysts at
Generali Investments wrote in a note.

Overall, the analysts said they maintained "a moderate
pro-risk tilt", with potential pullback in stocks providing
buying opportunities as economies look to re-open.

British stocks rose in anticipation of Finance Minister
Rishi Sunak announcing more borrowing on top of his almost 300
billion pounds ($418 billion) of COVID-19 spending and tax cuts
in a budget statement on Wednesday.

Homebuilders such as Persimmon, Taylor Wimpey
and Barratt Developments were the top gainers on the
FTSE 100.

Among other movers, Spanish travel booking group Amadeus
topped the STOXX 600 as expectations of a 2021 recovery
in travel demand drove a slew of price target hikes by major
brokerages.

British Airways-owner IAG also jumped 7% on similar
upgrades.

French food group Danone rose 1.4% after it said
it was taking a first step toward selling its stake in its
Chinese dairy partner Mengniu Dairy, and would use the
gains to buy back its own shares.

Swiss-listed shares of computer goods maker Logitech
International rose 1.6% after it raised its sales
growth forecast to about 63% for fiscal 2021, up from the 57-60%
range it previously expected.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Anil
D'Silva)