MILAN: A modest expansion in eurozone manufacturing activity and hopes of fresh US stimulus lifted European stocks across the board on Monday, with automakers, miners and construction & material firms leading the gains.

After a lukewarm trading session in the morning, the pan-European STOXX 600 picked up momentum after a strong Wall Street start and closed 2.1% higher.

German stocks outperformed, rising 2.7% after the country reported in July an expansion in factory activity for the first time since 2018, lifting hopes that the impact of the pandemic was easing in the sector.

Carmakers were the top gainers in Europe, up 3.8%, after Ferrari trimmed its full-year earnings forecast but said its second quarter order book rose significantly versus a year ago.

The broad gains helped banking stocks shed early losses following a set of disappointing earnings.

Europe's biggest lender by assets, HSBC, dropped 2.9% after its half-yearly profits more than halved and the bank warned its bad debt charges could blow past a previous estimate to $13 billion this year.

France's Societe Generale slipped 0.7% as it reported a 1.26 billion euro ($1.48 billion) quarterly loss.

Spanish stocks rose 1.4%, but underperformed regional peers as the country saw the biggest jump in coronavirus cases since a lockdown was lifted in June, while data showed international tourist arrivals to Spain fell 98% year on year in June.

British engineer Senior Plc, which counts planemaker Boeing and heavy equipment maker Caterpillar as some of its biggest customers, tumbled 15.1% as it shelved its interim dividend after swinging to a first-half loss.