UPDATE 3-European shares end whipsaw session higher as stimulus hopes persist

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

* Energy, travel & leisure lead gains

* Germany open to using EU emergency fund- report

* Virgin Money UK tops STOXX 600

* STOXX 600 company earnings seen plummeting
(Updates to close)

By Ambar Warrick and Thyagaraju Adinarayan

March 25 (Reuters) - European stocks ended another
tumultuous session higher on Wednesday as investors bet on
further stimulus measures to dull the economic impact from the
coronavirus outbreak, which showed no signs of slowing.

The pan-European STOXX 600 index closed up 3.1%
after earlier trading both in negative territory and as much as
almost 5% higher.

The index is still around 28% down from its record high in
February, despite gains in the last two sessions.

The energy and travel & leisure sectors,
which have been worst hit by the recent rout, led gains for the
day as cheap valuations attracted buyers.

However, the euro zone's volatility indicator also
ticked up on the day. With coronavirus death tolls in Italy and
Spain now the highest in the world, and with several major
European economies in lockdown, the situation seemed unlikely to
improve any time soon.

Still, sentiment was helped by the anticipation of a
whopping $2 trillion U.S. fiscal stimulus package.

Regional governments are also expected to ramp up measures
to dull the economic shock, with German lawmakers voting in
favour of suspending the constitutionally enshrined debt brake
for the first time ever to finance an unprecedented aid package.

A report also suggested that Germany, Europe's largest
economy, was open to using the European Stability Mechanism
(ESM) to prop up economies hit by the coronavirus.

"In our view, the challenge for EU leaders is to design an
ESM programme – and the political narrative around it – in a way
that removes stigma and the notion of 'bailout', which could
prove costly for the domestic politics of receiving countries,"
Reinhard Cluse, chief European economist at UBS wrote in a note.

German stocks rose about 1.8%, while stocks in
Italy, the country worst hit by the virus, rose about
1.7%.

German online fashion retailer Zalando closed
about 7.5% higher despite warning that shutdowns due to the
virus were hurting demand for its products.

Banking services provider Virgin Money UK topped
the STOXX 600, adding about 26% in its second session of
recovery after touching a record low earlier in the week.

Air France-KLM, British Airways-owner IAG
, Ryanair and EasyJet gained between 4%
and 12%.

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

Meanwhile, Refinitiv data showed that profit expectations
for European companies have deteriorated substantially, with
markets now seeing a 14.9% decline in earnings from STOXX
600-listed companies over the second quarter.

(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by
Kirsten Donovan)