Banks boost European stocks; Britain's FTSE sets record high

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* Britain's FTSE ends at new record high

* STOXX Europe 600 index also rises

* Fiat Chrysler partly recovers after slump

* But Renault drops on report of French emissions probe

* UBI Banca top STOXX gainer as banks rise

By Atul Prakash

LONDON, Jan 13 (Reuters) - European shares rose on Monday, led higher by banks stocks, with Britain's blue chip index finishing at an all-time high after extending a record winning streak to 14 days.

However, shares of French media company Technicolor fell 19.7 percent in their worst-ever one-day loss after a profit warning.

The European banking index was the top sectoral gainer, up 2 percent, helped by strong earnings from large lenders in the U.S. and the outlook for higher interest rates in the world's largest economy.

"With the (U.S. Federal Reserve) having raised rates last month and is expected to undertake additional hikes in 2017, banks are gaining on popularity again between investors, especially as many funds are still underweight this sector," Markus Huber, trader at City of London Markets, said.

The European auto index rose 0.8 percent. The index came off earlier highs after reports that French prosecutors were investigating Renault over suspected emissions cheating sent shares in the French car maker down 2.9 percent, partly offsetting a rebound in Fiat Chrysler.

The Italian car-maker recouped some of its previous session's 16 percent slump. That was triggered by the U.S. Environmental Protection Agency's (EPA) accusations that the car maker illegally masked excess diesel emissions. However Chief Executive Officer Sergio Marchionne told La Repubblica newspaper on Friday that the EPA's accusations that Fiat violated emissions laws will not have any impact on the carmaker's business plan targets.

Italian stocks dominated the list of top performers on the STOXX. Investment company Exor, which has a stake in Fiat, rose more than 6 percent.

UBI Banca surged 9.6 percent, the top STOXX gainer, after HSBC raised its target price for the stock following the bank's forecasts on Thursday to generate a net profit of 1.2 billion euros by 2020, up from 900 million euros under current business plan.

Britain's blue-chip FTSE 100 share index rose 0.6 percent to an all-time high following a record of 14 days of gains in a row, while the pan-European STOXX 600 added 0.95 percent.

Precious metals miners, however, came under pressure as gold prices retreated from the previous session's seven-week peak on a stronger dollar. Shares in Fresnillo and Randgold Resources fell 0.6 percent and 1.2 percent respectively.

(Additional reporting by Danilo Masoni; Editing by Jeremy Gaunt)